When is the primary trend considered confirmed using indexes?

The primary trend is considered confirmed using indexes when both indexes confirm each other. This concept stems from the Dow Theory, which suggests that for a trend to be deemed valid, it should be supported by multiple related market indicators.

In practical terms, when two major indexes, such as the S&P 500 and the Dow Jones Industrial Average, are moving in the same direction, it provides stronger evidence of the underlying trend. This means that if both indexes are showing upward movement, it suggests widespread participation in the market's rise, thus confirming a bullish trend. Conversely, if both indexes are declining, it confirms a bearish trend.

By requiring confirmation between indexes, traders reduce the risk of acting on false signals caused by anomalous price movements in a single index, which may not accurately reflect the broader market trend. This approach ensures that the analysis captures the overall market sentiment and reduces the likelihood of being misled by outlier behaviors in either index.