2(Intermediate)
Anyone who has looked at prices on a chart will notice that they do not move in a straight line. A primary upswing is interrupted by several re actions along the way. These countercyclical trends within the confines of a primary bull market are known as intermediate price movements. They last anywhere from 6 weeks to as long as 9 months, sometimes even longer, but rarely shorter. Countercyclical intermediate trends are typically very deceptive, often being founded on very believable but false assumptions. For example, an intermediate rally during a bear market in equities may very well be founded on a couple of unexpectedly positive economic numbers, which make it appear that the economy will avoid that much-feared recession.
When subsequent numbers are reported and found to be wanting, the bear market resumes. Intermediate-term trends of the stock market are examined in greater detail in Chapter 4 and are shown as a thin solid line in Figure 1.1. It is important to have an idea of the direction and maturity of the primary trend, but an analysis of intermediate trends is also helpful for improving success rates in trading, as well as for determining when the primary movement may have run its course.
