Bull Market
Definition
A bull market is a sustained period of rising prices in the broader market — traditionally defined as a 20% or greater rise from a recent significant low — characterized by strong economic growth, rising corporate earnings, investor confidence, and a dominant bias toward long positions across most sectors.
Example
“We were 18 months into a bull market with the S&P up 45% from the lows. Long setups were working everywhere, momentum strategies were printing, and even mediocre setups were profitable. In a bull market, the rising tide lifts everything.”
Detailed Explanation
Bull markets are the easiest environment for most trading strategies, especially long-biased approaches. When the macro trend is up, stocks have wind at their backs — pullbacks are shallower, breakouts hold more reliably, and momentum lasts longer before exhausting. Sectors rotate leadership but the overall market creates a rising floor under individual stocks. Understanding that you're in a bull market shifts your bias: be aggressive on long entries, give winners more room to run, and be much more selective about short setups that fight the dominant trend.
Bull markets don't mean every day or every week is green. Corrections of 10-15% are normal and healthy within a bull market — they shake out weak hands, reset valuations, and provide re-entry opportunities for the longer trend. The defining characteristic of a true bull market is that each correction finds support above the prior correction's low, and each recovery makes new highs. That sequence of higher highs and higher lows on the index level mirrors the same market structure principle that applies to individual stocks. When that sequence breaks — when the index makes a lower low that doesn't recover — that's the first sign the bull market may be ending.
The sentiment during bull markets creates its own risks. Extended bull markets foster complacency — traders stop using stops, oversize positions, and start attributing market gains to their own skill rather than the overall environment. The painful reality is that most strategies that "work" during a strong bull market stop working or become net losers when the regime shifts to a bear or choppy market. The best traders track their performance independently of the market's performance, asking "would I be profitable in a flat or falling market?" rather than assuming their returns reflect durable edge rather than favorable conditions.