Determine Market Trend (16 Oct 15)

Bull Market, Pullback, Correction and Bear Market

(1)     Pullback: -5% off 52W High   (2) Correction: -10% off 52W High   (3) Bear Market: -20% off 52W High

Benchmark	Symbol	% off 52-Week High	Market Trend
S&P 500	SPY	-4.15%	Bull Market
Dow Jones 30	DIA	-5.43%	Pullback
Nasdaq 100	QQQ	-5.48%	Pullback
Russell 2000	IWM	-10.00%	Correction

Traders who strive for consistency—their goal is to make money in all market environments.  Knowing whether you are in Bull Market, Bear Market or a Flat Market is equally important and key in assessing the potential for your trade.

Long Term Trend

The “big dog” of moving averages is the 200-day moving average.  If the index is trading above that level, the long-term trend is considered up; generally, the 200-day moving average is seen as a proxy for the long-term trend.

Benchmark	Symbol	Price	200-DMA	Market Trend
Nasdaq 100	QQQ	108.12	106.57	Uptrend
S&P 500	SPY	203.27	204.26	Downtrend
Dow Jones 30	DIA	171.88	174.14	Downtrend
Russell 2000	IWM	115.42	120.14	Downtrend

In an up-trending market, I will lengthen holding times and give my holdings more room to run.  In a wide trading range or a down-trending market, I use short holding times and grab profits quickly.