Market Cycles

AAA

DEFINITION of 'Market Cycles'

1. Trends or patterns that may exist in a given market environment, allowing some securities or asset classes to outperform others. The securities themselves may exhibit price patterns in their trading.

2. Trends within a particular sector or industry created by a particular innovation, product line, or regulatory environment. Revenue and net profits may exhibit similar growth patterns among many companies within a given industry.

INVESTOPEDIA EXPLAINS 'Market Cycles'

Market cycles are often hard to pinpoint until after the fact and rarely have a specific beginning or ending point. However, most market veterans believe they exist, and many investors pursue investment strategies that aim to profit from them by trading securities within the swings of the cycle.

Market cycles take both fundamental and technical indicators (charting) into account, using securities prices and other metrics as a gauge of cyclical behavior.

Some examples include the business cycle, semiconductor/operating system cycles within technology and the movement of interest-rate sensitive financial stocks.

RELATED TERMS
  1. Business Cycle

    The fluctuations in economic activity that an economy experiences ...
  2. Corrective Waves

    A set of stock price movements that occur against the main trend ...
  3. Cyclical Industry

    A type of an industry that is sensitive to the business cycle, ...
  4. Expansion

    The phase of the business cycle when the economy moves from a ...
  5. Elliott Wave Theory

    Theory named after Ralph Nelson Elliott, who concluded that the ...
  6. Secular Market

    A market driven by forces that could be in place for many years, ...
RELATED FAQS
  1. What is the difference between the cost of capital and the discount rate?

    The cost of capital refers to the actual cost of financing business activity through either debt or equity capital. The discount ... Read Full Answer >>
  2. How does the market share of a few companies affect the Herfindahl-Hirschman Index ...

    In economics and commercial law, the Herfindahl-Hirschman Index (HHI) is a widely used measure that indicates the amount ... Read Full Answer >>
  3. What does the rule of 70 indicate about a country's future economic growth?

    The rule of 70 could be used to indicate the approximate number of years that it would take a company's economic growth to ... Read Full Answer >>
  4. How is the rule of 70 related to the growth rate of a variable?

    The rule of 70 is related to the growth rate of a variable because it uses the growth rate in its approximation of the number ... Read Full Answer >>
  5. What makes the chemicals sector attractive to value investors?

    The chemicals sector is attractive to value investors because it is a capital-intensive sector that can become grossly undervalued ... Read Full Answer >>
  6. What are the benefits of using ceteris paribus assumptions in economics?

    Most, though not all, economists rely on ceteris paribus conditions to build and test economic models. The reason they do ... Read Full Answer >>
Related Articles
  1. Active Trading Fundamentals

    10 Timeless Rules For Investors

    Find out what most investors are doing wrong, and how you can do it right.
  2. Fundamental Analysis

    Sector Rotation: The Essentials

    We look at how the market signals impending economic cycles and sector performance during each stage.
  3. Fundamental Analysis

    Where's The Market Headed Now?

    Whether up, down or sideways, learn about some of the factors that drive stock market moves.
  4. Active Trading Fundamentals

    Capitalizing On Seasonal Effects

    We show you how to take advantage of periodic trends in the equity markets.
  5. Forex Education

    Intermarket Relationships: Following The Cycle

    Find out how commodity, bond, stock and currency markets interact.
  6. Bonds & Fixed Income

    Tips For Recession-Proofing Your Portfolio

    Find out what to do when the sun sets on a burgeoning market.
  7. Active Trading

    Getting Through The Rough Patches In Trading

    Learn how to recognize and adapt to tough times in the markets.
  8. Fundamental Analysis

    Investing Basics: Flight To Quality

    At times of market stress, investors flee from risky assets to investments the safest ones available.
  9. Forex Education

    A Simplified Approach To Calculating Volatility

    Though most investors use standard deviation to determine volatility, there's an easier and more accurate way of doing it.
  10. Economics

    Riding The Bear Into A Bull Market

    How can you get back into the market to avoid missing market recovery gains? Find out here.

You May Also Like

Hot Definitions
  1. Fracking

    A slang term for hydraulic fracturing. Fracking refers to the procedure of creating fractures in rocks and rock formations ...
  2. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  3. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  4. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  5. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  6. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
Trading Center