Understanding a Bull Market: What It Is and How It Works

Introduction

A bull market is a period when prices move higher and investor confidence grows. While definitions vary, many people associate a bull market with sustained gains in broad market indices. A common rule of thumb is a rise of 20% or more from a recent low, but not all rises meet every definition.

What counts as a bull market?

A bull market is a phase in which prices trend upward over time. The 20% threshold from a trough is widely cited, but some analysts use different horizons or look at multiple indices rather than a single chart. Broad measures often track major indices like the S&P 500 or global benchmarks.

Key features and indicators

• Steady or accelerating price gains over months to years
• Increasing trading activity and participation
• Positive signals such as improving earnings and macro indicators
• Optimism in market news and sentiment, while caution can persist

Bull markets vs. bear markets

• Bull market: prices rise from a trough, often accompanied by improving sentiment
• Bear market: prices fall from a peak, with cautious or pessimistic sentiment

Both are phases in market cycles and do not by themselves predict future moves.

History and context

Bull markets emerge as economies recover and corporate profits grow. They vary in length and drivers, from monetary policy moves to shifts in technology and consumer demand. Historical cycles show that what begins as a modest uptrend can become a prolonged phase of rising prices.

Conclusion

A bull market describes a sustained period of rising prices and growing optimism. Understanding how it’s measured and what typically accompanies it helps readers interpret market chatter and trends without assuming guarantees.