Are we in a bull market or a bear market?

By Investopedia Staff AAA
A:

A bull market is represented by a rising price trend, and a bear market is indicated by a falling price trend. Given this simple definition, you might think it would be easy to determine what type of market we're in at any point in time. However, it's not as easy as it sounds because it all depends on what time frame you choose when determining where one kind of market ends and another begins.

For example, say the market has been up for the past two years; you could then argue that we are still in the midst of a bull market. However, if the most recent three months were negative, you could argue instead that we've already hit the top and are actually in a new bear market. The first argument arises from looking at the past two years and the second argument arises from looking at the last three months - which one is right?

There is no perfect way to label a bull or bear market. It is easier to look back on previous time frames and clearly describe whether they are positive or negative by looking at the past peaks and bottoms - because the present market isn't as clear. So, because the answer to this question depends on whom you ask and what time frame you give, we can't say that there is ever a "correct" answer to this question. (For more information, see Digging Deeper Into Bull And Bear Markets.)

The easier answer is to identify bulls and bears in your individual stocks. To do so, check out Track Stock Prices With Trendlines.

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