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Market Structure

Bull Market

A market condition where prices are rising or expected to rise, generally defined as a 20% or greater increase from recent lows.

What is a Bull Market?

A bull market is a sustained period of rising stock prices. The standard definition is a 20% rise from a recent low. During a bull market, investor confidence is high, the economy is generally strong, and buying pressure dominates.

Characteristics

  • Rising prices: major indexes (S&P 500, Nasdaq) are trending higher over weeks and months
  • Strong economy: low unemployment, rising corporate earnings, consumer confidence is high
  • Dip buying: pullbacks are shallow and get bought quickly. "Buy the dip" works reliably
  • Broad participation: most sectors and stocks are going up, not just a few leaders
  • Retail enthusiasm: new investors enter the market, trading volumes increase, and financial media coverage is optimistic

Trading in a bull market

  • Long bias works: buying stocks and holding for swing trades tends to be profitable because the overall trend is up
  • Shorting is harder: stocks bounce faster and short squeezes are more common because the trend punishes bears
  • Do not confuse a bull market for skill: when everything goes up, every strategy looks like it works. The real test comes when the market turns
The longest bull market in US history ran from March 2009 to February 2020, lasting nearly 11 years. The S&P 500 gained over 400% during that stretch.

Related Terms

Bear Market

A market condition where prices are falling or expected to fall, generally defined as a 20% or greater decline from recent highs.

S&P 500

An index of the 500 largest publicly traded US companies, weighted by market cap. The most widely used benchmark for overall US stock market performance.