There is still debate as to whether the crash of 1998 was a bear market or merely a secondary move within the confines of a larger bull market. In hindsight, it would appear to be a secondary move. Even though the DJIA recorded a lower low on August 4 and had lost just over 20% by September 4, the two-month time frame makes it difficult to justify as a bear market.

Hamilton characterized secondary moves as a necessary phenomenon to combat excessive speculation. Corrections and counter moves kept speculators in check and added a healthy dose of guesswork to market movements. Because of their complexity and deceptive nature, secondary movements require extra careful study and analysis. Investors often mistake a secondary move for the beginning of a new primary trend. How far does a secondary move have to go before the primary trend is affected? This issue will be addressed in Part 3 of this article, when we analyze the various signals based on Dow theory.

Daily fluctuations, while important when viewed as a group, can be dangerous and unreliable individually. Due to the randomness of the movements from day to day, the forecasting value of daily fluctuations is limited at best. At worst, too much emphasis on daily fluctuation will lead to forecasting errors and possibly losses. Getting too caught up in the movement of one or two days can lead to hasty decisions that are based on emotion. It is vitally important to keep the whole picture in mind when analyzing daily price movements. Think of the pieces of a puzzle. Individually, a few pieces are meaningless, yet at the same time they are essential to complete the picture. Daily price movements are important, but only when grouped with other days to form a pattern for analysis. Hamilton did not disregard daily fluctuations, quite to the contrary. The study of daily price action can add valuable insight, but only when taken in context of the larger picture. There is little structure in one, two or even three days' worth of price action. However, when a series of days is combined, a structure will start to emerge and analysis becomes better grounded.