Is a Bull Market Coming? Look for These Signs

A bull market brings rising asset prices and a strong economy. Most experts define a bull period as XYZ. Predicting this type of market can help you make smart choices with your portfolio. These are the sure signs of a bull market just around the corner.

Fundamental Analysis

In terms of economic conditions, decreasing inflation often signifies a bull market. If inflation begins to approach the Federal Reserve's target of 3%, experts expect the stock market to improve accordingly. You'll also tend to see the market value increase by at least 20% for at least two consecutive months. Unemployment claims typically decline as a bull market approaches since businesses begin to hire again as their finances improve. Trading volume increases since investors add to their portfolios in anticipation of rising prices.

Technical Indicators

Technical analysis can also show signs of a bull market. For example, when the S&P 500 exceeds the 50% retracement level, it historically predicts a positive market reversal. You'll also see a higher percentage of stocks hit 21-day and 63-day highs with a bull market on the way.

Another technical predictor is a breadth-thrust indicator above 1.97. This metric compares the number of securities increasing in value compared to those declining in value over 10 trading sessions in a row. In addition, charts generally look more volatile just before a major change in the market.