Deciphering the Trend: It’s All a Matter of Perspective

Nearly every investor has heard of that venerable stock market saw, “The trend is your friend.”

It makes sense. The trouble is, though, for most investors, deciphering the trend is often an effort in futility.

However, it does not have to be so, as trends have identifiable characteristics, patterns that repeat time and time again.

The Characteristics of Trends

The first characteristic of trends is duration and extent: the minor or day-to-day trend; the intermediate or month-to-month trend; and the major trend, lasting a year or more. Although the intermediate and the major trends are most important, most investors seem to be mesmerized by the day-to-day trend.

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