vaibhav: market trend (bull and bear) market

Market Trend is the prevailing course or tendency of a financial market to move in a particular direction over time. ^[1] These trends are classified as secular trends (long term), primary trends(mid-term) and secondary trends (short-term). ^[2] The concept of a market trend is used in technical analysis and contrasts the standard academic view of financial markets, the efficient market hypothesis.^[3] ^[4]

Technical analysis utilizes the concept that market trends or market cycles occur with a certain degree of regularity and predictability and consideration of market trends is common to many investors. ^[5] The terms bull market and bear market describe upward and downward market trends respectively and can be used to describe either the market as a whole or specific sectors and securities (stocks).^[6] For example the expressions "bullish" and "bearish" mean may be used to mean "bullish on gold" or "bearish on technology stocks..

Secular market trends

A secular market trend is a long-term trend that lasts 5 to 25 years (but whose distribution may form a bell curve over a period of 17 years, in the stock market) and consists of sequential primary trends.

In a secular bull market the primary bear markets are usually shorter than the primary bull markets because the prevailing trend is bullish or upward moving. The United States was described as being in a secular bull market from about 1983 to 2000 (or 2007), with brief upsets including the crash of 1987 and the dot-com bust of 2000–2002.

In a secular bear market, the primary bull markets are usually shorter than the primary bear markets. An example of a secular bear market was seen in gold during the period between January 1980 to June 1999. During this period the nominal gold price fell from a high of $850/oz ($30/g) to a low of $253/oz ($9/g),^[7] and became part of the Great Commodities Depression. The S&P 500 experienced a secular bull market over a similar time period of 1982 to 2000.

Primary market trends

A primary trend has broad support throughout the entire market or market sector and lasts for a year or more.

[edit]Bull market

A bullish market trend in the stock market often begins before the general economy shows clear signs of recovery. A bull market is associated with increasing investor confidence, and increased investing in anticipation of future price increases capital gains.

India's Bombay Stock Exchange Index, SENSEX, was in a bull market trend for almost five years from April 2003 to January 2008 as it increased from 2,900 points to 21,000 points. Another notable and recent bull market was in the 1990s when the U.S. and many other global financial markets rose rapidly.

In describing financial market behavior, the largest group of market participants is often referred to, metaphorically, as a herd. This is especially relevant to participants in bull markets since bulls are herding animals. A bull market is also sometimes described as a bull run. Dow Theory attempts to describe the character of these market movements.

International sculpture team Mark and Diane Weisbeck were chosen to re-design Wall Street's Bull Market. Their winning sculpture, the "Bull Market Rocket" was chosen as the modern, 21st century symbol of the up-trending Bull Market.

[edit]Bear market

A bear market is a general decline in the stock market over a period of time.^[8] A bear market is a downward primary market trend. It is accompanied by widespread investor fear and pessimism. Investors anticipate further losses and are motivated to sell.

Prices fluctuate constantly on the open market. To take the example of a bear stock market, it is not a simple decline, but a substantial drop in the prices of the majority of stocks over a defined period of time. According to The Vanguard Group, "While there’s no agreed-upon definition of a bear market, one generally accepted measure is a price decline of 20% or more over at least a two-month period."^[9]

The most famous bear market in history followed the Wall Street Crash of 1929 and erased 89% (from 386 to 40) of market capitalization by July 1932, marking the start of the Great Depression. After slowly regaining nearly 50% of its losses, a longer bear market from 1937 to 1942 occurred in which the market was again cut in half. A milder, low-level, long-term bear market occurred from about 1973 to 1982, encompassing the stagflation of U.S. economy, the 1970s energy crisis, and the high unemployment of the early 1980s.

A notable bear market occurred between about March 2000 and October 2002. The last one occurred approximately between October 2007 and March 2009. A rise of around 40% happened between early March 2009 and early May 2009 and as of August 2009 the debate on where the market will trend is unresolved.