Secondary Trend

The secondary trend is the reaction. In a bull market it is a decline that retraces a meaningful part of the advance without making a new primary low. In a bear market it is a rally that fails under the prior primary high. Dow theory treated secondary moves as weeks to a few months. Use it as the swing against the tide.

On the primary chart, a counter-move that breaks minor structure but not the primary higher-low or lower-high sequence. It often retraces a third to two-thirds of the prior primary swing. Those fractions are typical, not required.

In a primary uptrend, the end of a secondary decline is the classic place to realign with the tide, once the secondary low holds and a minor higher high appears.

A secondary rally in a bear market is the classic place to realign short, once the rally fails. If the secondary move breaks the primary structure, it is no longer secondary. It is a possible new primary trend.

Holding a secondary rally as if it were a new bull market, without a new primary high.

The labels are clear after the primary trend resumes. While the correction is running, it looks like a reversal. Use the primary swing level to tell them apart.