Bull bear market
If you hear the phrase “its a bullish market” or a “bearish market” its simply referring to whether there is a rising or falling trend in the market.
- a bullish market refers to a market that has a long-term up trend. For a market to be bullish, investor confidence must be high and the market’s respective country will likely be showing solid economic growth. The number of stocks traded in a bull market is often high.
- a bearish market is referring to a market which has a long-term downtrend. A bear market will often arise when its respective country is in recession. The number of stock traded in a bear market is often low.
One theory as to where the bull and bear market got their names is due to the way the animals attack! A bull throws its horns up in the air and a bear swipes down at its prey.
A market usually gets labeled bullish or bearish after it has risen or fallen by over 20%. It is also important to note that stock markets generally fall quicker than they rise. This is because human fear of a loss is a stronger emotion than human that the satisfaction of gain!
Example: DJ30 Bullish market | June 2006 – June 2007
Example: S&P500 Bearish Market | April 2008 – May 2009
(Screenshot courtesy of www.freestockcharts.com)
Obvious Tip
It should appear obvious but a general rule you should follow is to buy in a bull market and sell in a bear market, especially when swing or position trading. Its always hard work making money going against the overall trend.
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