What could trigger a bull market?
For starters, they generally happen during periods when the economy is strong or strengthening. Bull markets are often accompanied by gross domestic product (GDP) growth and falling unemployment, and companies' profits will be on the rise.
A bull market (aka a bull run) is a long, extended period in the market when overall stock prices are on the rise. "Bull markets happen when the economy is strengthening, and stock prices are rising," says Teresa J.W. Bailey, CFP and senior wealth strategist at Waddell & Associates.
What causes a bull market? Sometimes stocks go up because other economic indicators are heading in the same direction. Take this simplified example: Gross domestic product (GDP), or the total value of a country's goods and services, may rise when there is more demand for those goods and services.
Bull markets generally take place when the economy is strengthening or when it is already strong. They tend to happen in line with strong gross domestic product (GDP) and a drop in unemployment and will often coincide with a rise in corporate profits.
A classic indicator of a bull run is a noticeable and sustained increase in the prices of various cryptocurrencies, especially major ones like Bitcoin and Ethereum. Prices may rise steadily or experience sudden surges, attracting the attention of traders and investors.
3. How long the average bull market lasts. As much as investors would like the answer to this question to be "forever," bull markets tend to run for just under four years. The average bull market duration, since 1932, is 3.8 years, according to market research firm InvesTech Research.
A popular strategy in bull market trading is buying a call option, which is a contract with a due date that gives you the right to buy a certain asset at a specified price. You may end up deciding not to buy at all as there's no obligation to do so, but you'd lose the premium you committed to buy the call option.
Generally, a bull market occurs when there is a rise of 20% or more in a broad market index over at least a two-month period.”
With stock indexes at all-time highs, it seems we are in the midst of a new bull market. While much of the market's recent gains have come from a handful of stocks, the rally has begun to broaden in recent months. Expectations of an earnings rebound in 2024 suggest earnings could continue to drive the market higher.
Even in a bull market, “if you check often you will see losses more often, which causes stress,” said Blanchett. That effect is magnified for the average person, because the pain of losing is more powerful than the pleasure of gaining, he added.
Why do markets suddenly rise?
Strong GDP growth for India, ease in the US inflation, buzz in banking and other PSU firms are some of the major reasons for the bull trend in the Indian stock market, say experts. Stock market today: The BSE Sensex today opened higher and went on to touch a new peak of 73,574.
The Last Bull Run: A Recap
The most recent significant bull run occurred in 2020 and extended into the early months of 2021. Cryptocurrencies, notably Bitcoin and Ethereum, experienced a surge in price, reaching unprecedented all-time highs.
S&P 500 Index
But the early days of 2024 swept away this uncertainty as the S&P 500 reached its highest level ever, signaling we've been in bull territory for quite a while -- since the index started rebounding from its bear market low in late 2022.
Investing in bull and bear markets
Having a higher allocation of stocks is optimal in a bull market, where there's more potential for higher returns. One way to capitalize on the rising prices of a bull market is to buy stocks early on and sell them before they reach their peak.
Is a bull market good or bad? A bull market is generally a good thing because it can indicate economic growth and optimism among business and consumers. It may also result in equity growth and higher dividends, depending on the stock and the sector.
The Running of the Bulls occurs every July 7th-14th in Pamplona, Spain. 6 Spanish fighting bulls, along with 6 steer, run from the Corrales de Santo Domingo to Pamplona's Plaza de Toros (bullfight arena.) Over 1 million spectators watch thousands of runners over the 8 days of the San Fermín Festival.
The first bull running is on 7 July, followed by one on each of the following mornings of the festival, beginning every day at 8 am.
The current bull market started in October 2022, when the S&P 500 reached its most recent low. Since then, the index has swelled about 35 percent.
The shortest bull market, which ran from June 1, 1932, to Sept. 7, 1932, lasted 98 days. The longest bull market lasted 4,494 days, from Dec. 4, 1987, to March 24, 2000.
The longest bear market lingered for three years, from 1946 to 1949. Taking the past 12 bear markets into consideration, the average length of a bear market is about 14 months. How bad has the average bear been? The shallowest bear market loss took place in 1990, when the S&P 500 lost around 20%.
Is it always smart to buy stock during a bull market?
Benefits of investing during a bull market
Profit potential: Bull markets are characterized by rising asset prices, which can lead to significant gains for investors. This presents opportunities to grow wealth and achieve financial goals.
- Moving Averages and Crossovers. Moving Averages. ...
- Bollinger Bands. Bollinger bands are a widely used tool in technical analysis. ...
- Moving Average Convergence Divergence (MACD) ...
- RSI Weakness: ...
- Cup-And-Handle Pattern.
You should always stay on the same side of momentum. So, you can buy high and wait for the stock to go higher; or you can use dips to buy. Either ways, you should never try to outguess the market. In a bull market, the very idea of selling against momentum can land you in big losses.
During a bull market, many investors may resort to a low-fee index fund that tracks an entire market such as the S&P 500 in the U.S. or the S&P/TSX Composite Index in Canada, with the hopes of capturing all the gains of the market.
Bull and bear markets often coincide with the economic cycle, consisting of four phases: expansion, peak, contraction, and trough. A bull market begins when investors feel that prices will start, then continue to rise; they tend to buy and hold stocks in the hope that they are right.
