Capital market trends can be sub-divided into secondary trends (short-term), secular trends (long term) and primary trends. A technical analysis of capital market trends assumes the fact that movements of market prices follow a particular trend. The trends of capital market are best described as periods when sellers are consistently outnumbered by buyers; in other words, the bears are outnumbered by bulls.
The primary market trends include bull markets and bear markets. The bull market is a situation where the investors buy in order to increase capital gains in the future. These market movements are best described in the Dow Theory. In a bear market on the other hand, the investors anticipate losses and therefore they are under the obligation to sell. Price fluctuation is an important trend of an open market. The Gross Domestic Product (GDP) and the stock prices are on the rise during a bull market. A bear market reveals negative trends, can also be a prequel of recession.
The secondary market trends refer to price changes within a primary trend. These price changes are however not permanent. A bear rally market refers to a temporary increase in price during the time of bull market. An impermanent decrease in price during a bull market is known as correction. During correction, the price drop is normally of 10% to 20%. the same percentage increase is experienced during the time of a bear market rally.
A secular market trend is also known as long-term trend. This trend usually remains for a period of five to twenty five years. Many primary trends sequentially arranged results in a secular market trend. In such a capital market trend, the bull markets are bigger than the bear markets. The gains of the previous bull market are not erased by the bear market. In secular bear markets, the duration of bull markets are smaller than bear markets.