{"id":306,"date":"2006-09-20T20:02:49","date_gmt":"2006-09-21T01:02:49","guid":{"rendered":"http:\/\/selfinvestors.com\/tradingstocks\/tutorial\/market-direction\/"},"modified":"2008-03-22T12:57:48","modified_gmt":"2008-03-22T17:57:48","slug":"market-direction","status":"publish","type":"page","link":"https:\/\/selfinvestors.com\/tradingstocks\/tutorial\/market-direction\/","title":{"rendered":"Market Direction"},"content":{"rendered":"

What is the General Market?<\/u><\/font><\/strong><\/p>\n<\/p>\n

Dow Jones Industrial Average<\/a>  
\nConsists of 30 larger, cyclical and industrial issues <\/p>\n

S&P 500<\/a>
\nBroader, more modern representation of the Dow<\/p>\n

Nasdaq Composite<\/a>
\nMore relevant to the growth investor; comprised of younger, faster growing companies<\/p>\n

S&P 600<\/a>, Russell 2000<\/a>
\nIndexes comprised of much smaller companies than Nasdaq; the majority of the stocks I follow <\/p>\n

These are the indices that will be watched for confirmation of a new bull market or signs that the bull has run its course and the bear will soon be in charge.  The links above provide you with a chart of the index.  Each day, it’s important to look at the price and volume action as well as support and resistance areas on the chart. <\/font><\/p>\n

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Market Cycle: Bulls Vs. Bears<\/u><\/font><\/strong><\/font><\/p>\n

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Market cycles tend to follow the health of the economy, but keep in mind that the market always looks several months into the future.  In other words, bear markets end while the economy is still struggling and bull markets end before recession hits.  Bear markets are necessary to clean up prior excesses and the clear the way for a new bull market with new leaders.  The frenzied stock buying of the late 90’s and the subsequent crash thereafter is a great example of "the greater the rise, the greater the fall".<\/font><\/p>\n