Bull Market


A market trend is a perceived tendency of financial markets to move in a particular direction over time. These trends are classified as secular for long time frames, primary for medium time frames, and secondary for short time frames. Traders attempt to identify market trends using technical analysis, a framework which characterizes market trends as predictable price tendencies within the market when price reaches support and resistance levels, varying over time.

Bull Market

A bull market is the name given to a particular period of growth. A bull market therefore, starts when the market is at its lowest position and when it is impossible for prices to go down any lower. A bull market brings increasing prices and business expansion with itself. The bull market also marks the ending of pessimist trends and the start of positive reactions which encourage investors to come to the market and buy funds and market commodities, although their prices are continuously increasing.

The bull market is a market condition and any economic market around the world may experience this trend in its life cycle. It is also known as a primary trend because it remains for a period of over a year.

The Importance of Optimism

A bull market is fragile in terms of the emotions of the economy. The bull market figures run on the level of optimism found in market stakeholders. It thrives on the presence of positive feelings and optimism with regards to the growth of a natural market.

It is, in fact, difficult to judge the time when a market changes its growth trends but speculation and psychology play a very important role in bringing about this change. Often, bull markets are created based on the suspected behavior of a particular stakeholder although no steps are taken by any investor.

Why Bull?

The name bull market was characterized by the opposite terms of bulls and bears. A bull is characterized by showing horns while holding the head high up. It attacks by striking its horns upwards. This shows that the market trends are indicating that the prices are rising and going way above the head. On the other hand, a bear is depicted with clawing down its opponents that shows that a market will plummet to the ground in the coming time.

A Notable Example

An example of a bull market trend can be presented by looking at the Mumbai Stock Exchange for a period of 2003 to 2008. The Stock exchange index of SENSEX increased massively from 2900 to 21000 points in these five years showing an annual growth of around 145%.

Further Reading