Knowing A Bull Market

By Mike Swanson

The terminology Bull market and bear markets are generally used to describe the direction of the market either up or down. Stock prices up and down both during a trading day, and from one day to the next. But terms such as bull and bear describe the trend over the long term. Many analysts use a minimum analysis period of two years to determine if a change is a trend or just a change. They also feel the market needs to move at least 20%.

The term bull market is when the stock market is increasing in price. These increases usually begin when the market is at its lowest ebb. You can see with gold stocks over the past few years. When the cycle changes and things begin improving the investing market feels there are profits to be made.

When a bear markets occurs there is a period of constant stock price decline. The decline is not in one stock but in the bulk of the market.

The most famous bear market conditions were post 1929 after the Wall Street crash. In the five years after this stocks lost nearly 90% of their value. They obviously recovered but it was a long road.

There is a recognised pattern to bear markets that a large initial decline is followed by a short term temporary correction in prices. Many investors trade at this time an are burnt when the next wave happens and there is a sustained decrease in stock prices.

But bull and bear markets are a cycle and one follows another. The problem is that there is no guarantee when the change will come or how long the patterns will last. It is easy to identify in retrospect, but much harder predicting the future.

For many people the idea that markets have cycle is forgotten. One can make money in both a bear and a bull market. - 23212

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