Accumulation is considered the first stage in the cycle, as it...

Accumulation is considered the first stage in the cycle, as it occurs immediately after the market has reached the “rock bottom” of a downturn. This is the time when large institutional investors may see an opportunity to purchase shares at what they consider a “discounted” rate.

Institutional investors can take their time during this accumulation process, purchasing stocks at regular intervals to avoid driving up prices too high or too quickly. They may buy a stock when it reaches a price they've determined to be desirable, then wait for any market reaction to subside, let the price to level out again, and repeat the process.

Individual investors may start buying up more positions at this stage as well, though at a much smaller scale.