by Makoy

Created on: January 24, 2012

A bull market is a period of time wherein the prices of securities and assets go up giving short traders and investors significant gains. It is a market condition that everybody loves. Though such term is used extensively and more in correlation to the stock market, it is also used and manifested in real estate, properties, foreign exchange, and other investments.

Some bull markets last for weeks, some months, and some extend for as long as a year. It depend on how strong the market sentiment is or what pushes it to remain and continue to go bullish. So what are the causes of making the market sentiment bullish? Here's a few of the most common causes of bull markets.

1.) Seasonal trends. Christmas, new year, a newly elected president or a leader, these are a few of the many seasonal trends in the market that generally push prices up. Market sentiment is very high during these times. December is a month where stock prices normally soar especially on the commodities sector. Christmas is normally a time to spend and traders and investors take advantage of such psychology by positioning themselves early. Starting a new year also results to a very strong market. Many traders exit their stock positions during late December in order to cut taxes. These traders buy back or reposition themselves early in January resulting an increase in demand in stocks pushing its prices higher. Politics is also a determining factor in a bull market. Elections normally give out positive sentiment especially if the incumbent or previous administration or leader isn't as good as the expectations of a new one.

2.) Recession and depression. Strong bullish markets normally follow either a recession or a depression. A recession or a depression occurs because of very weak market sentiment and confidence prompting businesses to run for cover and playing it safe by not getting too much involved in the market. A strong positive catalyst such as a solution to the recession or depression reverses the market trend and will result to very strong positive sentiment. Some or if not most bull runs came after recessions and depressions. The deeper the dive, the higher the climb. Experienced and professional traders and investors make a lot of money during recessions and depressions by being patient and waiting for a reversal.

3.) Economics. The stock market, foreign exchange, and other securities and assets all boil down to the concept of supply and demand or in other words, economics. Higher demand

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