A stock (or broadly a security) that is widely perceived by the market to be a representative of a specific industry or the entire market. Such a stock is considered to be leading the market, and in it is a common clue as to the direction of future price trends. For example, if the price of a bellwether stock is moving up, then the whole market would be considered to setting on a bullish trajectory.
Examples of bellwether stocks include those of General Motors and IBM (previously), and Microsoft and Apple (in the present).
A bellwether stock is often seen to be a thermostat of the state of the stock market, and therefore technical analysts tend to keep it under surveillance in their attempts to predict market movements.
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