Stock Market's General Direction

If investors continually hear positive news about the stock market or particularly about a segment, such as technology, they will probably rush to invest in it, even if they don’t necessarily take the time to research the company or sector.  This is called "herd mentality".  On the other hand, a few bad days in the market might cause a panic as people want to get rid of their stocks even though the companies in their portfolio might be strong, solid and profitable.

  • Bull Market:  is an extended rise in the price of stocks, bonds and commodities.  It last for at least a few months.  Everyone wants to get in on the action so generally it causes trading volume to rise.  
  • Bear Market:   is just the opposite of a Bull Market.  This is a prolonged period of declining prices.  Fear of a slowdown in the economy can cause a bear market.  Rising interest rates can cause a bear market in bonds.