Trends Have 3 Phases:
• The accumulation phasewhich is when the “expert” traders are actively taking positions which are against the majority of people in the market. Price does not change much during this phase as the “experts” are in the minority so they are not a large enough group to move the market.
• The public participation phase which is when the public at large catches on to what the “experts” know and begin to trade in the same direction. Rapid price change can occur during this phase as everyone piles onto one side of a trade.
• The Excess Phasewhere rampant speculation occurs and the “smart money” starts to exit their positions.
http://www.informedtrades.com/1964-dow-theory.html