Stock Market 101: What is a bear and bull market?

In a bull race, a bull attacks its opponents by moving its horns from below to upwards, thus eventually swooping the person up in the air.

Now in a bear fight, a bear stands on its feet, moves its hands from top to bottom, and aims to claw its opponents down! (Also, imagine having a bear standing on top of you! Won't you sink into the sand?) 

So remember: a bull market means the market is going upwards and the public sentiment is positive while a bear market means that the market is going down and that the public sentiment is negative.  

A BULL MARKET

In a bull market, the stock prices rise upwards over a period of time. You may have seen how every time there is some great news on TV or in newspapers, there is usually a rise in stock prices and public sentiment becomes positive.

For eg: If news breaks out that the country has seen better and stronger levels of production or better exports in the current year and the trend is expected to continue, you will notice that the stocks and the stocks exchanges will usually see a positive public sentiment. Or if a company gets higher than expected earnings or say a government comes up with new laws that will suit a company's growth. The stocks will go in green and prices will start rising.

A BEAR MARKET

In a bear market, the stock prices fall downwards over a period of time. This is normally seen when inflation rates are rising or if there is a slowdown in the economy or a fall in employment. Remember, in 2020, when Covid hit and everyone thought they are going to die. Stock markets across the globe crashed as the public sentiment was negative. You might also remember the recent crypto crash when Celcius stopped people from withdrawing their funds or when the US banks raised their interest rates. The markets crashed as the public sentiment was negative. 

But wait. 

Not every up and down movement is called a bull and a bear market. There is a standard of 20% in place which is the criteria to measure if the market is bullish or bearish. When the stock price rises 20% or more from its recent low or 52-week low, it is said to have entered a bull phase. When a stock falls 20% or more from its recent peak or 52-week high, it is said to have entered a bear phase.

But wait. Again.

Not every 20% movement is a bull and a bear market trend. When the 50-day moving average of the stock or index crosses the 200-day moving average, the bullish or bearish trend is confirmed.