A bull market is a sustained period of rising stock prices (typically +20% from lows). A bear market is a sustained decline of 20%+ from recent highs. Understanding which market you're in changes everything about how you trade.
- SPY and QQQ making higher highs and higher lows.
- Most stocks above their 200-day moving average.
- Investor sentiment is confident; news is mostly positive.
- Growth stocks and risk assets outperform.
- Average bull market lasts ~3.8 years and gains ~150%.
- SPY down 20%+ from its recent peak.
- Most stocks below their 200-day moving average.
- Defensive sectors (healthcare, utilities, consumer staples) outperform.
- Cash, bonds, and gold tend to hold value better.
- Average bear market lasts ~1.4 years and loses ~36%.
In a bull market:
Buy dips, hold longer, use breakout setups.
In a bear market:
Reduce size, take profits faster, consider defensive sectors or cash.
'Don't fight the tape' -- avoid buying falling stocks hoping for a bottom.
Related: Moving Averages (MA20, MA50, MA200) • Market Capitalization • Diversification