What Does a Bullish or Bull Market Mean?
There are two types of markets in any asset class, bullish and bearish. Both indicate the general direction or sentiment, be it stocks, real estate, or commodities. While prices go up and down, a bullish market occurs over an extended period.
No one knows the first person that used the term bullish, but its original use was in the stock market. It was a reference to how bulls jump up. Investors first used the word for speculation. Today, bullish means you are optimistic about the market and believe that prices will go up.
There are many other theories about why the bull is the symbolism for an uptrend market. However, the fact remains that it is the accepted terminology.
How Do You Know a Market Is Bullish?
The most noticeable indication of a bull market is its price movement. Bull markets generally see long periods of increase in prices with very little consolidation or drawdown. Bull markets often lead to profits for many investors and can last for years. Bull markets are also more predominant and generally last longer.
The other not-so-obvious indication relies more on sentiment. Investors use different references to conclude that prices will likely go up. Some of the factors they use include:
- Chart patterns
- Fundamentals (news)
For example, if there is a bullish sentiment of the stock market, the entire market will likely see positive gains for an extended period. Not all stocks will profit or move at the same time. A bullish market speaks on a broader scale. Others use the term bullish for single assets like Bitcoin, expecting upward movement.
Bull Markets Are Normal
A bullish market is an indication of economic growth. When stock prices rise, it means that companies are bringing in profits. Bullish markets are also when there’s a lot more money flowing, leading to more investments and movement.
Of course, bullish markets don’t last forever. It is part of a cycle of ups and downs that create a healthy balance.