As new information arrives, market participants quickly disseminate the information and the price adjusts accordingly. Likewise, the market averages discount and reflect everything known by all stock market participants. The Market Is Comprised of Three Trends. The Primary trend usually lasts more than one year and may last for several years. Secondary trends are intermediate, corrective reactions to the Primary trend.
Minor trends are short-term movements lasting from one day to three weeks.
Secondary trends are typically comprised of a number of Minor trends. Primary Trends Have Three Phases. The Dow Theory says that the First phase is made up of aggressive buying by informed investors in anticipation of economic recovery and long-term growth. The informed investors, realizing that a turnaround is inevitable, aggressively buy from these distressed sellers. The Second phase is characterized by increasing corporate earnings and improved economic conditions.