There are several factors that directly and indirectly determine the behavior of the stock market, and recognizing them early on can provide a big advantage when investing. For starters, there are two different phases that the market regularly undergoes: the primary trend and the secondary trend.
Most investors focus on the primary trend, and the two sub-trends that has the influence to drive the performance of the stock market.
Bullish Market Trend
The bullish market trend is characterized by the stock market’s stable growth. This particular period is when the “bull” or the buyer is at the driver’s seat of the market.
Several factors can work together to result in a bullish trend and these include the country’s overall political climate, economic stability and growth, and developments in both business as well as the industrial sectors.
In a bullish market, there is a steady growth because buyers are more confident to take part in the market and invest even in high-valued stocks. This will be followed by a strong demand for stocks, continuously raising and empowering the current trend.
The opposite of the Bullish market is what analysts call, the Bearish Trend. This particular trend is characterized by either a dramatic or a gradual period when the demand for stocks falls to their lowest rate.
Several factors contribute to this event such as a country’s poor economic performance, political instability, or even a stunted growth in their major industries and sectors.
In this period, buyers become pessimistic about the market’s future. During this time, investors think that selling their stocks can save their money and lower the risks. In return, large quantities of stocks become available, but demands remain low. Thus further pulling the market down, intensifying an already depressing market performance.