Bullish vs. Bearish Market – Explained

1. Bullish vs. Bearish Market – Explained S&P 500, Dow Jones Industrial Average and Nasdaq Composite are the major U.S. equity indices that continued to gain through early 2021. Such consistent gains excite investors, naturally, to expect more profits. However, the market remains volatile always, but it is highly volatile these days. So it is even more crucial to understand the stock market conditions, like the bullish vs bearish market. Bearish and Bullish markets are the standard terminology in the stock market and broader topics in itself. A bullish market refers to a market condition when stock prices are on the rise and when your trade is bullish, you want an increase in stock price. On the other hand, during bearish market conditions, the stock prices are on the decline, and if your trade is bearish, you favor a drop in the stock price. It is the closest and shortest true definition. Beyond that, there are many concepts regarding bullish and bearish to understand, like which is the profitable one. You can look at the bulls and the bears from different angles regarding profitability. Let us start with how animal names become financial terms? Why Is It Called the Bearish and Bullish Market? The story goes with the real-life attacking characteristics of these animals. Bulls hit their horns upside to attack, whereas bears hit their claws downside to attack. It is the general real-life perception for easy understanding.

2. Bullish Market vs. Bearish Market Source: yimg.com Bull Market It is the stock market being in an upward trend, and investors consider it prosperous. Generally, it is the series of time frames when asset price increases for a prolonged duration. It can be months or years. Usually, it indicates the stock prices. However, other assets like commodities, currencies, real estate are not exceptions of bulls. Typically, it is seen that the three main indexes – the S&P 500, NASDAQ, and the Dow Jones Industrial Average go bull simultaneously. 2017, 2019, and the beginning of 2020 have been the bull market in the bull market. Bull Attributes ● Conventionally a bull market is a market condition when there is a rise of 20% in stock prices after a decline of 20% and before a second 20% drop. ● Bull markets occur when most investors are optimistic, and there is a leap up in an economy. A bull market tends to have a strong enough economy. ● Bull market rallies ● when companies succeed

3. ● when interest rates are lower and inflation expedites. ● Bulls result in a sound GDP and a rise in the employment graph. ● A bull market witnesses a rise in IPO activities. ● Investors can enjoy regular and increased corporate profits. Most of the investors are confident during a bull market as the assets’ demand will be unsinkable. It is easy to spot a bull market as compared to a bear market as stock prices increase month over month. Historically, bull markets last longer and are more powerful than bear markets. One should note that most of the time, the U.S. stock market remains bullish. Stocks perform well and go up over time, and long-term investors take advantage of it as they tend to hold stocks for years. Considerable history includes: ● Reaganomics bull market in the year 1980 ● Dot-com bull market in the year 1990 ● Tech bull market in the year 2010 The record of the longest bull market in U.S. stock market history is for December 1987 – March 2000 (4,494 days). Bear Market A bear market depicts a market with falling stock prices. Bear markets decline the indices such as the S&P 500. Bear markets can last for a few weeks or several weeks and can result in a market crash if it sustains for multiple years. Bear Attributes ● During a bear market, there will be a 20% or more drop in the stock prices in a specified period. The duration may be a minimum of two months. ● Bears do not usually fall as easily as bulls go up. ● In bears, investors may start to lose their investing confidence. The perspective of losses is huge here due to the constant down in value.

4. ● However, an experienced investor has many techniques to invest in the bear market. You can find some of these here in the post. ● Bearish market records a lower level of demand for stocks and, thus, stock prices decrease. ● Bearish markets usually go along slowdown, and the rates of unemployment increase rapidly. The majority of businesses go down due to the reduced purchasing power of individuals. with recessions and economic Analysts have to spend much more hours to trigger the next bear market period and even more to find out the extent it will last. Poor Economic Conditions due to Bear Market: ● Great Depression during 1929 – 1933 ● Dot-com crash during 2000 – 02 ● Great Recession during 2007 – 09 Bearish vs. Bullish Sentiment Source: feednews.com

5. The collective opinion toward the stock market is called Bearish or bullish sentiment. Investor sentiment, besides economic cycles, are the crucial driver of bear markets. The bullish sentiment means most investors invest with the thought of an increase in stock prices. In contrast, bearish sentiment means investors believe that prices will decrease. A bullish investor, also called a bull, believes that a particular security or asset price will go up. It can be a specific sector, share, bond, commodity, currency, or collectible. Sometimes bulls think that the stock market as a whole is due to rise, anticipating general profits. On the other hand, a bearish investor, also known as a bear, can be bearish about a specific industry or stock or asset, or the market as a whole. Bullish vs. Bearish Indicators Source: bitcoinskupina.com Traders need to identify time frames over which they can be bullish or bearish through technical analysis.

6. Bullish Indicators: Bullish assets, especially equities, tend to rally and show recent strength like huge volume. Here are a few indicators that will help you determine if a stock is bullish or bearish. ● 52-week highs ● Significantly high volume ● Wondrous news ● Breakouts Bearish Indicators: On the other hand, when stocks tend to be weak, it may be a bearish market. So you may see a stock opens at high in the morning but closes lower. Or there are sudden super high prices but due for a pullback. It is a tough task to identify a bearish stock market and its time frame.

7. Bullish vs. Bearish Candlestick Patterns Source: fxguys.co.uk You can analyse trends to know whether a stock is bullish or bearish. But with candlestick patterns, you can analyze additional indicators for price action. Bullish Candlestick Patterns 1. The Hammer 2. Morning Star 3. Piercing Line 4. Three White Soldiers 5. Abandoned Baby 6. Three Line Strike

8. Bearish Candlestick Patterns 1. Shooting Star 2. Evening Star 3. Three Black Crows 4. Two Black Gapping Bullish vs. Bearish Traders Source: vecteezy.com Being a Bull During a bullish market, more investors look to buy than sell. They prefer to take long positions and buy a financial instrument that is going to be appreciated. However, a bull can be a long-term investor considering overall market conditions or a short-term trader considering recent impactful news specific to the company, for example, quarterly earnings, right issues, new deals, etc.

9. Bullish Short-term Trading Short-term traders believe that the company graph will go upside in the coming period, i.e., in minutes, days, or even weeks. In such cases, mainly intraday traders analyze stock charts instead of the underlying company. For instance, a trader may invest in a company just a day before it releases its quarterly earnings with the belief that the stock will meet his/her expectations. Being a Bear On the other hand, bearish traders look to take short positions to make a profit if the market is about to decline. A bear market can give a bad experience only if you don’t know the technique to be adaptive to changing setups. Conversely, only adaptable traders can learn techniques to trade bears. ● Usually, traders prefer bonds and defensive stocks like utilities in a bear market. ● In weak markets like bears, short selling is considered a lot better. So, should you trade both Bullish and Bearish Markets? Every trader loves to trade in the bullish market, but they need to adapt to the bearish markets as well. Traders need to be flexible. The Closing – Bullish vs. Bearish market In a nutshell, the simplest way to deal with the markets: ● Invest in falling prices when you are bearish about a financial asset or during bear markets. ● Invest in up-trending prices when you are bullish about a financial asset or during bull markets.

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