Bull Market
In short
Sustained upward trend in markets — typically 20%+ gain from a prior low
A bull market is when prices are rising and investors are optimistic. Officially, a bull market begins when the market rises 20% from its low. Bull markets are historically much longer than bear markets.
A bull market is characterized by rising prices (20%+ gain from prior trough), strong economic fundamentals, and investor optimism. The average US bull market lasts about 4 years and gains 150%. During bull markets, virtually all stocks rise — skill is harder to distinguish from luck.
Related concepts
- Bear Market — A bear market is when prices fall 20% or more from their peak and investors are pessimistic. Bear markets are typically shorter than bull markets (average 9-10 months) but feel much longer emotionally.
- Correction — A correction is a drop of 10-20% — smaller and more common than a bear market. Corrections happen roughly once a year on average. They're painful but healthy — they prevent bubbles from inflating too far.
- Rally — A rally is when prices bounce back up strongly after falling. Dead cat bounces (brief rallies in a continuing downtrend) can trap buyers. A confirmed rally breaks above key resistance and is accompanied by rising volume.
- VIX (Volatility Index) — VIX is called the 'fear gauge.' When investors are scared, they buy options to protect themselves, which pushes VIX up. VIX above 30 means real fear in the market. Below 15 means complacency. Extreme fear is often a contrarian buy signal.