Any event that occurs at a regular interval of time is called a cycle. This cycle also occurs in the market with the rise and fall of the market stocks. Understanding these cycles is very important for any investor. The most traditional way of analyzing a bearish and bullish stock market is by using cycle charting. Please continue reading to know more about market cycle analysis.
Phases of a market cycle
The market stocks may rise and fall at any point
in time. However, they can be analyzed accurately only by using many logistic
mathematical formulas. This process can also be done by cycle analysis. This
process is important, just like charting your
menstrual cycle. Cycle analysis consists of
phases such as the accumulation phase, markup phase, distribution, and
downtrend phase. These phases help in the proper understanding of the market.
The stock market cycles are not the same for everyone, but they vary depending
upon the individual trends that a person is interested in. The market cycle
does not have any specific range but can be looked upon at varying ranges. For
example, a person who does trading might look at the stock market from a view
of five or seven years. But a person who owns a high profitable corporate
company might look and analyze the market cycle with a range of ten or twenty
years from now.
The battle between upswing and downswing
The market for even highly
profitable companies is not the same during upswing or downswing. A high-level
company might get a profitable return when the market is bullish at the
upswing. This is the period where people are comfortable with their money. But
at a bearish or downswing in the market, people might not afford high-level
products. Thus, cycles are difficult to trust blindly, but they help in
assessing the market.
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