What defines a bull market?

A bull market is defined by a significant increase in prices, often associated with a general sense of optimism among investors regarding the future performance of the economy. In this context, when investors are optimistic, they tend to have confidence in the potential for stock prices to rise further, leading them to engage in buying activities. This increased buying pressure contributes to the upward momentum in stock prices, reinforcing the positive cycle of a bull market.

In contrast, other scenarios reflect different market conditions. For instance, falling prices coupled with increased selling indicates a bear market, characterized by negative sentiment. Similarly, when investors are pessimistic and avoiding investments, this highlights a lack of confidence in market recovery, which is not characteristic of a bull market. Additionally, stagnant markets with little to no growth do not exhibit the enhanced buyer activity or optimism that define a bull market. Thus, the essence of a bull market is captured in the notion that investors are optimistic and actively buying stocks.