Trend on a series nobody trades

Trend is the most used and least defined word in market commentary. The fix is the same as in the FX track - define it so it can be wrong - with one extra requirement that is specific to indices.

Define it so two people can disagree

"Higher highs and higher lows on the daily chart, measured close to close, since a stated date" is a definition. "It is trending up" is an impression.

The test is whether someone else applying your definition to the same data reaches the same answer. If they cannot, you have not defined a trend - you have described a feeling, and module 6 cannot test it.

The index-specific requirement

Name the series. Module 2 lesson 3 established that a cash-session chart and a 24-hour futures chart give different daily highs and lows for the same index on the same day.

So a trend defined on highs and lows is defined differently on each. A trend that exists on one series and not the other is not a contradiction; it is two different measurements, and quoting one without saying which is the same incompleteness as quoting a correlation without its window.

What a trend is evidence of

That the weighted sum has been moving in one direction. That is genuinely something - persistence exists in index series often enough to be worth measuring - but it is a description of the past with a claim about the future attached by the reader rather than by the data.

Where it breaks

• Around regime changes, when the driver shifts and the persistence stops.
• Across a roll, on a continuous futures chart, where a step is not a move - module 2 lesson 7.
• During concentration episodes, where the trend belongs to a few constituents.

None of these are reasons to ignore trend. They are the specific ways an index trend misleads, which is more useful than a general warning to be careful.