The primary indicators that help define a bull market are moving averages, advances/declines, volume, identified support and resistance areas, and momentum indicators. Since a bull market is one in which prices are generally rising, the basic indication of a bull market is upsloping trendlines. Additionally, price should remain above major moving averages such as the 50-day, 100-day and 200-day moving average, and the shorter-term moving averages should remain well ahead of, or above, longer-term moving averages. The wider the spread, or separation, between moving averages, the stronger the trend. Markets never go straight up indefinitely and retracements occur when the market overextends itself. While the market occasionally tests support such as the 50-day moving average, in a bull market, the support levels generally withstand the tests.
As price moves up and down in a bull market, making new highs, retracing and consolidating, areas of support and resistance appear, some minor and some major. In a continuing bull market, price continues to overcome resistance levels, which then become identified support levels. One sign of a solid bull market is one in which support areas are generally more solid than resistance areas, a market that, for the most part, moves higher with more ease than it moves lower.
To monitor an overall bull market in stocks, analysts keep a close eye on the advance/decline line, which should be upsloping overall in concert with the continuing upward movement of major stock market indexes such as the S&P 500 Index. A bull market features advancing issues consistently outnumbering declining issues. If the advance/decline line begins to show divergence from the market's movement, turning down as stock prices continue to advance, this can be a warning signal the overall uptrend may be about to reverse or at least temporarily retrace.
Volume is a very good technical indicator to validate price movement. "Genuine" price movements, as opposed to temporary countertrend swings, nearly always occur with rising volume. One of the keys analysts use to distinguish retracements from market reversals signaling an overall trend change is the fact that reversals are usually accompanied by a high volume of trading, whereas retracements typically occur on low volume trading. Therefore, traders and analysts commonly track volume indicators such as the On Balance Volume (OBV) indicator or the Volume Price Trend indicator.
Momentum indicators like the average directional index (ADX) and moving average convergence divergence (MACD) are also used to define and confirm a bull market. While indicators, just like market prices, move up and down over the course of a sustained trend, when viewed on a long-term time frame, momentum should reveal a continuing upsloping trend. Over the long-term, upswings of indicators such as the MACD are of longer duration and more pronounced than downward swings. The ADX is an excellent indicator for determining when the market is actually in a trend, as opposed to being in a ranging or consolidation phase. Beyond technical indicators, bull markets are characterized by investor confidence. In a strong bull market, few investors are looking to hedge or worry over whether to take profits.