TYPICAL

PARAMETERS
FOR
INTERMEDIATE
TRENDS
Some Basic Observations

*The price movement that corresponds to changes in

economic activity over the course of a typical 3- to 4-year
business cycle.

* Though it is clearly important to have an idea of

the direction and maturity of the primary trend, it is also
helpful to have some understanding of the typical
character and duration of the intermediate trend for the
purpose of improving success rates in trading, and to
help assess when the primary movement may have run
its course.
Successful analysis of intermediate
trends for any market or stock offers the
following advantages:

Changes in intermediate trends aid in

identification of turning points in the primary
trend.

Intermediate-term trading involves fewer

transactions than trading of minor price
movements and, therefore, results in lower
commission and execution costs.

Intermediate-trend reversal points occur several

times a year and can, if properly interpreted,
allow a relatively high and quick return on
capital.
Intermediate A primary trend typically
consists of five intermediate
Cycles trends, three of which form
Defined part of the prevailing trend,
while the remaining two run
counter to that trend.
In a bull market, the
intermediate countertrends are
represented by price declines; in
a bear market, they form rallies
that separate the three
intermediate down waves.
 Intermediate-term trends that move in
the same direction as the primary trend are
generally easier to profit from.

Those who do not have the patience to

invest for the longer term will find that
successful analysis of intermediate
movements offers superior results, especially
as the day-to-day or minor swings are, to a
large degree, random in nature and, therefore,
even more difficult to capitalize on.
Intermediate movements can go either with or against the main trend,
which means that there is an intermediate cycle like a primary one.

An intermediate cycle consists of a primary intermediate price movement

and a secondary reaction. It extends from the low of one intermediate trend
to the low of the other, as shown in Figure 4.2.