If you are a follower of financial market news, surely you have heard the terms bull market and bear market. These two terms are used to refer to the direction of the stock market. If the market is taking an upward trend, it is called a bull market, but if it is taking a downward trend, it is called a bear market. Hence the reference to the optimistic investors who They lead the market to the upside with bulls, while the pessimistic investors who drag the market to the downside play the role of bears, but what does the name have to do with the rise or fall of the market.
Although the secret of this name is not known for certain, the most popular stories indicate that it has to do with how the bull and the bear attack their opponents. When the bull attacks, it raises the victim with its horns upwards (and thus became a symbol of the bull market).
Whereas the bear when it attacks pulls its victim down (hence it has become a symbol of the bear market)
When is the market considered bullish or bearish?
The most common rule is that a market is considered bullish if it rose 20% from a specific low point, and considered bearish if it fell 20% from its high.
The market takes an upward trend when optimism dominates the majority of its participants, who tend to believe that stock prices will rise, and therefore they accept to buy in the hope that they can sell later at a higher price. In contrast, when pessimism dominates the audience of investors about the future of prices, the market retreats to the downside. Downward, due to a lot of selling.
In a bullish market, more shares are required to be bought than offered for sale, and as a result, share prices rise as investors compete for the available shares and vice versa, in a bear market where the supply is greater than what is required and thus prices fall.
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