|
Daily Market Trends -
November 5, 2010
No Changes to the Trend Table today.
(+) Change Up (-) Change Down
|
Trend
|
Dow
Jones
|
S&P
500
|
NASDAQ
Comp
|
NASDAQ
100
|
|
Primary
|
Up
|
Up
|
Up
|
Up
|
|
Intermediate
|
Up
|
Up
|
Up
|
Up
|
|
Minor
|
Up
|
Up
|
Up
|
Up
|
What Is Dow Theory?
NOTE: The concepts of Primary, Intermediate
and Minor trends emanate from Dow Theory. The following description
of the Dow Theory is attributed to:
Dow Theory: The Three-Trend Market By Chad Langager and
Casey Murphy, senior analyst of ChartAdvisor.com.
Primary Trend
In Dow Theory, the primary trend is the major trend of
the market, which makes it the most important one to determine.
This is because the overriding trend is the one that affects
the movements in stock prices. The primary trend will also
impact the secondary and minor trends within the market.
Dow determined that a primary trend will generally last
between one and three years but could vary in some instances.
Regardless of trend length, the primary trend remains in
effect until there is a confirmed reversal. For example,
if in an uptrend the price closes below the low of a previously
established trough, it could be a sign that the market is
headed lower, and not higher.
When reviewing trends, one of the most difficult things
to determine is how long the price movement within a primary
trend will last before it reverses. The most important aspect
is to identify the direction of this trend and to trade
with it, and not against it, until the weight of evidence
suggests that the primary trend has reversed.
Secondary, or Intermediate, Trend
In Dow Theory, a primary trend is the main direction
in which the market is moving. Conversely, a secondary trend
moves in the opposite direction of the primary trend, or as
a correction to the primary trend.
For example, an upward primary trend will be
composed of secondary downward trends. This is the movement
from a consecutively higher high to a consecutively lower
high. In a primary downward trend the secondary trend will
be an upward move, or a rally. This is the movement from a
consecutively lower low to a consecutively higher low.
In general, a secondary, or intermediate, trend
typically lasts between three weeks and three months, while
the retracement of the secondary trend generally ranges between
one-third to two-thirds of the primary trend's movement. For
example, if the primary upward trend moved the DJIA from 10,000
to 12,500 (2,500 points), the secondary trend would be expected
to send the DJIA down at least 833 points (one-third of 2,500).
Another important characteristic of a secondary
trend is that its moves are often more volatile than those
of the primary move.
Minor Trend
The last of the three trend types in Dow Theory
is the minor trend, which is defined as a market movement
lasting less than three weeks. The minor trend is generally
the corrective moves within a secondary move, or those moves
that go against the direction of the secondary trend.
Due to its short-term nature and the longer-term
focus of Dow Theory, the minor trend is not of major concern
to Dow Theory followers. But this doesn't mean it is completely
irrelevant; the minor trend is watched with the large picture
in mind, as these short-term price movements are a part of
both the primary and secondary trends.
Most proponents of Dow Theory focus their attention
on the primary and secondary trends, as minor trends tend
to include a considerable amount of noise. If too much focus
is placed on minor trends, it can to lead to irrational trading,
as traders get distracted by short-term volatility and lose
sight of the bigger picture. Stated simply, the greater the
time period a trend comprises, the more important the trend.
For further discussion of Dow Theory we recommend "Street
Smart Chart Reading Vol. 2"Pages 35-39 by Don
Worden, "The Dow Theory" by Robert Rhea, "The Stock Market
Barometer" by William P. Hamilton.
Quotes of Selected Passages from "Reminiscences of
a Stock Operator - Edwin Lefevre"
-
"In speculation when the market goes against you,
you hope that every day will be the last day, and you
lose more than you should had you not listened to hope.
And when the market goes your way you become fearful that
the next day will take away your profit, and you get out
too soon. Fear keeps you from making as much money as
you ought to. The successful trader has to fight these
two deep-seated instincts. He has to reverse what you
might call his natural impulses. Instead of hoping he
must fear; instead of fearing he must hope. He must fear
that his loss may develop into a much bigger loss, and
hope that his profit may become a big profit."
-
" The punishment for being wrong is to lose money. The
reward for being right is to make money. "
-
" It is well to remember a rule of manipulation. It
is this: Stocks are manipulated to the highest point possible
and then sold to the public on the way down. "
-
" The big money is always made first by the public -
on paper. And it remains on paper. "
-
" The speculator's deadly enemies are: Ignorance, greed,
fear and hope.
Archives Daily Market
Trends Information
Daily Market Trends -
November 4, 2010
Changes to the Trend Table today. (+)
Change Up (-) Change Down
|
Trend
|
Dow
Jones
|
S&P
500
|
NASDAQ
Comp
|
NASDAQ
100
|
|
Primary
|
Up
|
Up
(+)
|
Up
|
Up
|
|
Intermediate
|
Up
|
Up
|
Up
|
Up
|
|
Minor
|
Up
|
Up
(+)
|
Up
|
Up
|
Bull Market is now open for trading!
Daily Market Trends -
November 3, 2010
Changes to the Trend Table today. (+)
Change Up (-) Change Down
|
Trend
|
Dow
Jones
|
S&P
500
|
NASDAQ
Comp
|
NASDAQ
100
|
|
Primary
|
Up
(+)
|
Down
|
Up
|
Up
|
|
Intermediate
|
Up
|
Up
|
Up
|
Up
|
|
Minor
|
Up
(+)
|
Lateral
|
Up
|
Up
|
Daily Market Trends -
November 2, 2010
Changes to the Trend Table today. (+)
Change Up (-) Change Down
|
Trend
|
Dow
Jones
|
S&P
500
|
NASDAQ
Comp
|
NASDAQ
100
|
|
Primary
|
Down
|
Down
|
Up
(+)
|
Up
|
|
Intermediate
|
Up
|
Up
|
Up
|
Up
|
|
Minor
|
Lateral
|
Lateral
|
Up
|
Up
|
Daily Market Trends -
November 1, 2010
No Changes to the Trend Table today. (+)
Change Up (-) Change Down
|
Trend
|
Dow
Jones
|
S&P
500
|
NASDAQ
Comp
|
NASDAQ
100
|
|
Primary
|
Down
|
Down
|
Down
|
Up
|
|
Intermediate
|
Up
|
Up
|
Up
|
Up
|
|
Minor
|
Lateral
|
Lateral
|
Up
|
Up
|
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