Determine Market Trend (23 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
Nasdaq 100	QQQ	-1.17%	Bull Market
S&P 500	SPY	-2.15%	Bull Market
Dow Jones 30	DIA	-2.96%	Bull Market
Russell 2000	IWM	-9.62%	Pullback

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	112.78	106.78	Uptrend
S&P 500	SPY	207.51	204.36	Uptrend
Dow Jones 30	DIA	176.37	174.15	Uptrend
Russell 2000	IWM	115.85	120.11	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.