Bull Market

Stock trading dictionary: meaning, example and how traders use it.

Last updated: October 17, 2026

Definition: Bull market is the term for a sustained period of rising stock prices, commonly defined as a gain of 20% or more from a recent low in a major index. Bull markets are usually accompanied by investor optimism and economic growth.

How a bull market works

The 20% threshold mirrors the definition of a bear market and is a convention rather than a rule. A bull market is marked by a series of higher highs and higher lows in a broad index, rising corporate earnings, and growing confidence. It can also describe a sector, a commodity, or a single stock.

Bull markets rarely move in a straight line. They are interrupted by pullbacks and occasional corrections of 10% or more. As long as the index recovers and continues to make new highs, the bull market is generally considered intact.

What drives bull markets

  • Economic expansion: rising output and employment support consumer spending and corporate profits.
  • Interest rates: lower or stable rates reduce borrowing costs and make stocks more attractive relative to bonds.
  • Earnings growth: sustained profit increases justify higher share prices.
  • Investor sentiment: optimism attracts new money, which can reinforce gains and, in late stages, push valuations to extremes.

No single factor starts or sustains a bull market, and different cycles have been driven by different mixes of these forces.

Example: measuring a bull market

Suppose a hypothetical index bottoms at 3,000 after a bear market. Over the next several months it climbs to 3,600, a 20% gain from the low, meeting the common bull market definition. It keeps rising to 4,500, with a 7% pullback along the way, for a total advance of 50% from the bottom.

Healthy participation shows up in market breadth. If the advance-decline line also makes new highs, the rally is broad. If the index climbs while most stocks lag, the advance is narrower and more dependent on a few large companies.

Volume patterns help too. Advances on rising volume and pullbacks on lighter volume are generally read as signs of steady demand, while heavy volume on down days late in a rally can hint that larger holders are selling into strength.

How investors approach a bull market

Investors often see their portfolio drift toward stocks as equity values rise, so periodic rebalancing helps keep risk in line with goals. Many favor growth and cyclical sectors during expansions, which can be tracked with a sector monitor. Late in a bull market, rising valuations and speculative behavior can raise the risk of a sharp correction. Bull markets end, but their timing is notoriously hard to predict, and sitting out entirely has its own costs.

Frequently asked questions

How long do bull markets last?

There is no typical length. Bull markets have historically lasted from under two years to more than a decade, and they generally last longer than bear markets.

What is the difference between a bull and bear market?

A bull market is a sustained rise in prices, commonly 20% or more from a low; a bear market is a sustained decline of 20% or more from a high.

Why is it called a bull market?

The common explanation is that a bull attacks by thrusting its horns upward, while a bear swipes its paws downward, mirroring the direction of the market.

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For information only, not investment advice. See the disclaimer.