What is a bull market, commonly referred to as a bear market?
A slump means a prolonged drop in prices in a given market. In the situation described, it means a prolonged period of falling prices of securities or commodities listed on a given exchange.
What price movements are associated with a bull market?
A slump usually means a decline in the main indexes of a particular stock market, followed by the prices of most companies. The concept of a bull market can also be applied to other markets. It is used in reference to the real estate market or the commodities market, for example.
It is commonly referred to as a bear market, after the animal’s characteristic attack – carried out from the bottom up.
Boom-bust cycles
The bull market cycle is scalable, like other movements in the stock market. It has its characteristic phases:
- panic,
- discouragement,
- disbelief,
- indifference,
- growth,
- euphoria,
- saturation.
These phases always occur at different times, in different cycles. It is often said that there is a very long Kondratiev cycle (about 54 years), a 9-year cycle, a Kitchin cycle (3 or 4 years), up to minute cycles.
Given that different sectors of the economy reach different phases of the boom-bust cycle at different times, it is often argued that the bull market starts first in the dollar, followed by bonds, stocks, then real estate and finally commodities.
Some of the phases overlap with others, but the overall scale of action is clearly noticeable. There is always a market to make money in, taking advantage of price increases.
Example of Kitchin cycle model – to illustrate the stock market situation
- Phase I: The beginning of the recession – a bull market in bonds, a slump in stocks and natural resources
- Phase II: Deepening of recession – end of bond bull market, end of bull market – due to discouragement in the market; apparent fall in commodity market prices
- Phase III: Beginning of recovery – bond yields fall, bull market in equities; commodity and stock prices rise
- Phase IV: Expansion underway – bull market in bonds, bull market in equities; commodity prices begin to rise
- Phase V: Peak of growth – bonds continue to decline, while stocks peak and begin to slowly decline; strong upward trends in the natural resources market
- Phase VI: The beginning of the recession – the end of the bull market in bonds, stocks and natural resources.
