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In investing, financial markets are commonly believed to have market trends that can be classified as primary trends, secondary trends (short-term), and secular trends (long-term). This belief is generally consistent with the non-scientific practice of technical analysis and broadly inconsistent with the efficient markets hypothesis. The Frankfurt Stock Exchange (outside) The DAX chart (inside) The Frankfurt Stock Exchange (German: FWB® Frankfurter Wertpapierbörse) is a stock exchange located in Frankfurt, Germany. ...
Investment is a term with several closely related meanings in finance and economics. ...
In economics, a financial market is a mechanism which allows people to trade money for securities or commodities such as gold or other precious metals. ...
Technical analysis, also known as charting, is the study of the trading history (the price and volume over time) of any type of traded security (stocks, commodities, etc. ...
In finance, the efficient market hypothesis (EMH) asserts that stock prices are determined by a discounting process such that they equal the discounted value (present value) of expected future cash flows. ...
A bull market is a prolonged period of time when prices are rising in a financial market faster than their historical average, in contrast to a bear market which is a prolonged period of time when prices are falling.
Investors can be described as having bullish or bearish sentiments. Market trends are witnessed when bulls (buyers) outnumber bears (sellers), or vice versa, consistently over time. In general, a bull or bear market refers to the market and sentiment as a whole but it can also be used to refer to specific securities, sectors, or similar ("bullish on IBM", "bullish on technology stocks" or "bearish on gold", for example).
Primary market trends
Bull market A bull market tends to be associated with increasing investor confidence, motivating investors to buy in anticipation of further capital gains. The longest and most famous bull market was in the 1990s when the U.S. and many other global financial markets grew at their fastest pace ever [1]. In finance, a capital gain is profit that is realized from the sale of an asset that was previously purchased at a lower price. ...
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 described as a bull run. Dow Theory attempts to describe the character of these market movements. It has been suggested that this article or section be merged with Group behaviour. ...
Dow theory is a theory on stock price movements that provides the basis for technical analysis. ...
Bear market A bear market tends to be accompanied by widespread pessimism. Investors anticipating further losses are motivated to sell, with negative sentiment feeding on itself in a vicious circle. The most famous bear market in history was the Great Depression of the 1930s [2]. In many parts of economics there is an assumption that a complex system of determinants will tend to lead to a state of equilibrium. ...
The Great Depression was a worldwide economic downturn which started in 1929 (although its effects were not fully felt until late 1930) and lasted through most of the 1930s. ...
Prices fluctuate constantly on the open market; a bear market is not a simple decline, but a substantial drop in the prices of a range of issues over a defined period of time. By one common definition, a bear market is marked by a price decline of 20% or more in a key stock market index from a recent peak over at least a two-month period. [citation needed] However, no consensual definition of a bear market exists to clearly differentiate a primary market trend from a secondary market trend. A stock market index is a listing of stocks, and a statistic reflecting the composite value of its components. ...
Secondary market trends A secondary trend is a temporary change in price within a primary trend. These usually last a few weeks to a few months. A temporary decrease during a bull market is called a correction; a temporary increase during a bear market is called a bear market rally.
Whether a change is a correction or rally can be determined only with hindsight. When trends begin to appear, market analysts debate whether it is a correction/rally or a new bull/bear market, but it is difficult to tell. A correction sometimes foreshadows a bear market.
Correction A market correction is a sometimes defined as a drop of at least 10%, but not more than 20% (25% on intraday trading).
Major disasters or negative geopolitical events can spark a correction. One example is the performance of the stock markets just before and after the September 11, 2001 attacks. On September 7, 2001, the Dow fell 234.99 points to 9,605.85, thoroughly pushing the Dow into a correction. On September 17, 2001, the first day of trading after the attacks, the Dow Jones Industrial Average plunged 684.81 points to 8,920.70. That loss officially pushed the Dow, not just even further into a correction, but a bear market. (Although unless investors had prior knowledge of the events of September 11, 2001, it would be impossible for the attacks to have had an effect on the markets ahead of time.) Geopolitics is the study which analyses geography, history and social science with reference to international politics. ...
A sequential look at United Flight 175 crashing into the south tower of the World Trade Center The September 11, 2001 attacks (often referred to as 9/11—pronounced nine eleven or nine one one) consisted of a series of coordinated terrorist[1] suicide attacks upon the United States, predominantly...
September 7 is the 250th day of the year (251st in leap years). ...
2001: A Space Odyssey. ...
September 17 is the 260th day of the year (261st in leap years). ...
2001: A Space Odyssey. ...
The Dow Jones Industrial Average (NYSE: DJI) is one of several stock market indices created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow. ...
Because of depressed prices and valuation, market corrections can be a good opportunity for value-strategy investors. If one buys stocks when everyone else is selling, the prices fall and therefore the P/E ratio goes down. In addition, one is able to purchase undervalued stocks with a highly probable upside potential. In finance, the P/E ratio of a stock (also called its earnings multiple, or simply multiple, P/E, or PE) is used to measure how cheap or expensive share prices are. ...
Bear market rally A bear market rally is sometimes defined as a rise of at least 10%, but no more than 20%.
Notable bear market rallies occurred in the Dow Jones index after the 1929 stock market crash leading up to the market bottom in 1932, as well as throughout the late 1960s and early 1970s. The Japanese Nikkei stock average has been typified by a number of bear market rallies since the late 1980s while experiencing on overall downward trend. The Dow Jones Industrial Average (NYSE: DJI) is one of several stock market indices created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow. ...
1929 (MCMXXIX) was a common year starting on Tuesday (link will take you to calendar). ...
1932 (MCMXXXII) was a leap year starting on Friday (the link will take you to a full 1932 calendar). ...
The 1960s decade refers to the years from 1960 to 1969, inclusive. ...
The 1970s decade refers to the years from 1970 to 1979, inclusive. ...
Nikkei 225 (日経平å‡æ ªä¾¡, 日経225) is a stock market index for the Tokyo Stock Exchange (TSE). ...
The examples and perspective in this article or section may not represent a worldwide view. ...
Secular market trends A secular market trend is a long-term trend that lasts 5 to 20 years, and consists of sequential primary trends. In a secular bull market the bear markets are smaller than the bull markets. Typically, each bear market does not wipe out the gains of the previous bull market, and the next bull market makes up the losses of the bear market. Conversely, in a secular bear market, the bull markets are smaller than the bear markets and do not wipe out the losses of the previous bear market.
An example of a secular bear market was seen in gold over the period between January 1980 to June 1999, over which the gold price fell from a high of $850/oz to a low of $253/oz [3], which formed part of the Great Commodities Depression. Conversely, the S&P 500 experienced a secular bull market over a similar time period [4]. General Name, Symbol, Number gold, Au, 79 Chemical series transition metals Group, Period, Block 11, 6, d Appearance metallic yellow Atomic mass 196. ...
The Great Commodities Depression is the steep, general recession in commodity prices between 1980 and 2000, both in real and nominal terms. ...
The S&P 500 is a list of 500 U.S. corporations and a stock market index, owned and maintained by Standard & Poors. ...
These secular bull and bear market trends are also termed "supercycles". "Grand supercycles" of 50 to 300 years have also been proposed by Nikolai Kondratiev and Ralph Nelson Elliott. // Definition In Elliott wave theory (or the Elliott Wave Principle), the Grand Supercycle is the largest degree of the Elliott Wave Fractal that was proposed by Ralph Nelson Elliott. ...
Nikolai Dmitriyevich Kondratiev (1892-1938) was a Russian economist. ...
Ralph Nelson Elliott (born July 28, 1871, in Marysville, Kansas; died January 15, 1948) was the creator of the Elliott wave theory describing market trends in the stock market. ...
Market events -
An exaggerated bull market fueled by overconfidence and/or speculation can lead to a stock market bubble. At the other extreme, an exaggerated bear market, that tends to be associated with falling investor confidence and panic selling, can lead to a stock market crash and a recession. A stock market boom is a sudden dramatic gain of value of shares of stock in corporations. ...
Black Monday (1987) on the Dow Jones Industrial Average A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a market. ...
A stock market bubble is a type of economic bubble taking place in stock markets, in which a wave of public enthusiasm, evolving into herd behavior, causes an exaggerated bull market. ...
A stock market bubble is a type of economic bubble taking place in stock markets, in which a wave of public enthusiasm, evolving into herd behavior, causes an exaggerated bull market. ...
Black Monday (1987) on the Dow Jones Industrial Average A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a market. ...
A recession is usually defined in macroeconomics as a fall of a countrys real Gross Domestic Product in two or more successive quarters of a year. ...
Causes Both bull and bear markets may be fueled by sound economic considerations and/or by speculation and/or investors psychological biases. The stock market is controlled by people and, as a result, emotions. Expectations play a large part in financial markets and in the changes from bull to bear environments. More precisely, attention should be paid to positive surprises and negative surprises. The tendency is for positive surprises to characterise a bull market (when the news continually tends to exceed investor's expectations) and conversely negative surprises tend to characterise the bear market (with expectations disappointed).
Technical analysis -
Technical analysis attempts to determine whether a market or security is in a bull or bear phase and to generate trading strategies to exploit this phase. Many technical analysts believe that financial markets are cyclical and move in and out of bull and bear market phases regularly. Technical analysis, also known as charting, is the study of the trading history (the price and volume over time) of any type of traded security (stocks, commodities, etc. ...
Technical analysis, also known as charting, is the study of the trading history (the price and volume over time) of any type of traded security (stocks, commodities, etc. ...
// [edit] Introduction [edit] Definition If we were to take snapshots of an economy at different points in time, no two photos would look alike. ...
Etymology The precise origin of the phrases "bull market" and "bear market" is obscure. The most common etymology points to London bearskin "jobbers" (brokers),[citation needed] who would sell bearskins before the bears had actually been caught in contradiction of the proverb ne vendez pas la peau de l'ours avant de l’avoir tué ("don't sell the bearskin before you've killed the bear")—an admonition against over-optimism [citation needed]. By the time of the South Sea Bubble of 1721, the bear was also associated with short selling; jobbers would sell bearskins they did not own in anticipation of falling prices, which would enable them to buy them later for an additional profit. Etymology is the study of the origins of words. ...
London (pronounced ) is the capital city of England and the United Kingdom. ...
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Look up proverb in Wiktionary, the free dictionary. ...
Hogarthian image of the South Sea Bubble by Edward Matthew Ward, Tate Gallery More well known than The South Sea Company is perhaps the South Sea Bubble (1711 - September 1720) which is the name given to the economic bubble that occurred through overheated speculation in the company shares during 1720. ...
// Events Pope Innocent XIII becomes pope Johann Sebastian Bach composes the Brandenburg Concertos April 4 - Robert Walpole becomes the first prime minister of Britain September 10 - Treaty of Nystad is signed, bringing an end to the Great Northern War November 2 - Peter I is proclaimed Emperor of All the Russias...
To meet Wikipedias quality standards, this article or section may require cleanup. ...
Some analogies that have been drawn, but are likely false etymologies: A false etymology is an assumed or postulated etymology which is incorrect from the perspective of modern scholarly work in historical linguistics. ...
- It relates to the common use of these animals in bloodsport, i.e bear-baiting and bull-baiting.
- It refers to the way that the animals attack: a bull attacks with its horns from bottom up; a bear attacks with its paw from above, downward.
- It relates to the speed of the animals: bulls usually charge at very high speed whereas bears normally are lazy and cautious movers.
- They were originally used in reference to two old merchant banking families, the Barings and the Bulstrodes.
- Bears hibernate, while Bulls do not.
- Bears keep their chin up, while Bulls keep their chin down.
- Bear neck points down while Bull's points upwards.
Another plausible origin is from the word "bulla" which means bill, or contract. When a market is rising, holders of contracts for future delivery of a commodity see the value of their contract increase. In a falling market, the counterparties--the "bearers" of the commmodity to be delivered, win because they have locked in a price higher than the present for future deivery. A blood sport is a sport involving bloodshed or the killing of animals for food, pest control, or entertainment. ...
Bear_baiting in the 18th century, engraving, 1796 Bear_baiting is a blood sport that was a popular entertainment from at least the 11th century in which a bear is secured to a post and then attacked by a number of dogs. ...
Bull-baiting was a popular amusement, particularly in 17th and 18th-century England, in which trained bulldogs attacked a tethered bull. ...
Hibernation is a state of regulated hypothermia, lasting several days or weeks, that allows animals to conserve energy during the winter. ...
Historic examples - In May 2006, emerging markets including India witnessed a correction. Indices fell as much as 20% before resuming the secular bull run.
- The most recent example of a correction preceding a bear market was the stock market performance during the 3rd quarter of 2001. Dismal job, labor, and retail numbers in addition to the September 11 attacks pushed the stock market into a correction and later a bear market by September 2001 that lasted until December 2002.
- The Black Monday crash of 1987 did not push the markets into a bear market. It was a sharp, dramatic correction within an upward trend.
- The October 27, 1997 mini-crash is considered a somewhat more minor stock market correction when compared to Black Monday, but, like the 1987 crash, it was a correction during an upward trend.
The World Trade Center on fire The September 11, 2001 attacks were a series of coordinated terrorist attacks against the United States on September 11, 2001. ...
our fence fell over DJIA (19 July 1987 through 19 January 1988) FTSE 100 Index (19 July 1987 through 19 January 1988) Black Monday is the name given to Monday, October 19, 1987, when the Dow Jones Industrial Average (DJIA) fell dramatically across the world. ...
1987 (MCMLXXXVII) was a common year starting on Thursday of the Gregorian calendar. ...
The October 27, 1997 mini-crash is the name of a global stock market crash that was caused by an economic crisis scare in Asia. ...
See also // [edit] Introduction [edit] Definition If we were to take snapshots of an economy at different points in time, no two photos would look alike. ...
In finance, financial markets facilitate: The raising of capital (in the capital markets); The transfer of risk (in the derivatives markets); and International trade (in the currency markets). ...
What follows is a list of over 250 Wikipedia articles on finance topics. ...
The New York Stock Exchange A stock market is a market for the trading of company stock, and derivatives of same; both of these are securities listed on a stock exchange as well as those only traded privately. ...
Technical analysis, also known as charting, is the study of the trading history (the price and volume over time) of any type of traded security (stocks, commodities, etc. ...
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