Bullish vs Bearish and Long vs Short: Stock Market Definitions

Our watch lists and alert signals are great for your trading education and learning experience. Another example some traders will look at is CNN’s custom fear and greed index. Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information. We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors.

This cycle continues, often ending up in a market bubble. A bull market is defined as beginning when the market rallies 20% off its bear market lows. The bull market ends when the market drops 20% from its all-time highs. We also offer real-time stock alerts for those that want to follow our options trades.

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This means you expect the price of the stock to drop below its current position in the near future. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade and/or any of its affiliated blackbull markets review companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website.

However, they can also see this is a sale to load up on more shares of their favorite value stock. When a bull market is in full swing, sentiments are optimistic. Knowing which one is the best depends on your skill set. Regardless of the current market we’re in, the standards of strong portfolios remain constant.

Shorting a bearish trade refers to placing a sell order in a currency pair with an expectation for the prices to drop. Identifying a bullish or bearish market involves observing key indicators. In a bullish market, look for rising stock prices, increased investor confidence, strong GDP growth, and low unemployment rates. Major stock indices trending upward also signal a bull market. Conversely, a bearish market is characterised by falling stock prices, high unemployment, declining GDP, and widespread pessimism among investors. Bullish is typically a positive market performance, while bearish is the opposite.

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How to Identify Bullish and Bearish Market Trends

Bull market growth has historically been longer and more sustained than bear market periods of decline. It’s common for individual investors to get spooked by bear market headlines and suffer from market facilitation index loss aversion bias, where losses loom larger than gains. However, over the long term the market usually does well. “Given the very sharp falls in investor sentiment over the past few days, it would be typical for there to be a bounce in equity prices,” Oppenheimer writes. “However, it could easily morph into a cyclical bear market given the growing recession risk,” Oppenheimer adds.

Recent events can play a huge role in overall market outlook. Global pandemics, wars in foreign countries and other major world events can certainly impact prices. As stocks fall, events like these can also lead news sources to report or signal a bearish market. A bull market indicates a belief that the stock market will rise in overall value. This usually comes from increases in the a random walk down wall street market share prices for the overall stock market.

Some exchange-traded funds (ETFs), however, actually are designed to make money when the market goes down. Knowing whether other investors are bullish vs bearish on the market can help you decide whether you should adjust your investment portfolio. If you’re new to the investing world, there are a few characteristics of bullish vs. bearish markets that can help you understand what these terms mean. The concepts of bullish vs. bearish sentiment are pretty straightforward. You can be bullish or bearish a market, stock, or indicator.

• During a bull market, the economy distributes its positive returns toward investors.
• A bearish market can also be known as a self-driving phenomenon.
• We know that you’ll walk away from a stronger, more confident, and street-wise trader.

You can be bullish on a stock for the day, but bearish for the long term. For instance, if you desire to swing trade, you ideally want to find a trending market. If you only trade shares in a bullish market, what will you do when the market goes bearish or trades sideways? This is where options come in and all the different strategies that come with it. Iron condors are great options and strategies when the market trades sideways.

• Nadex is subject to U.S. regulatory oversight by the CFTC.
• There has been a lot of talk about banning short selling.
• During these times, companies underperform and citizens feel the effects through unfavorable repercussions such as inflation, lack of availability, and closures of small businesses.

Bullish investors tend to have the patience to allow downward resistance to eat into returns in hopes of actualizing substantial returns in the long run. A bullish trend is an upward trend in a particular asset. A market in a long-term uptrend is called a bull market. If a trader says, “I’m bullish on gold,” she thinks the price of gold will go up. The trend can indicate whether a stock is bullish or bearish.

During a currency pair’s bullish market, the country from which the pairs belong witnesses a rise in GDP. In a bearish market, the falling currency pair’s countries witness a fall in the GDP of the country. Bear and bull markets influence various asset classes in different ways.

In turn, a decrease in investment activity can be a precursor to a slowing economy. The major bullish market indicators are a rise in the employment rate, a rise in the stock prices, and an increase in the country’s GDP compared to the previous term. The primary indicators of a bearish market are an enormously high unemployment rate, a decrease in stock prices, and a downturn in the country’s GDP. A bullish market trend is realised when the economy strengthens and has a low employment rate. A bearish market trend is identified when the economy is weakening and has a high employment rate.

Bullish vs Bearish: What Do These Market Trends Mean?

Buying in a bear market can be advantageous as stocks are typically undervalued, offering the potential for significant gains when the market recovers. Conversely, investing in a bull market can also be profitable as rising prices often lead to steady gains. However, buying in a bull market may come with higher prices and the risk of overvaluation. Diversifying and maintaining a long-term perspective can help mitigate risks in both scenarios. Fluctuations of stock prices define bull and bear markets.