What is a bull market?

A bull market is defined as a market condition in which prices are rising or are expected to rise. This term is often applied to the overall stock market, but it can also refer to other types of markets, including commodities or bonds. The defining characteristic of a bull market is sustained increases in prices, typically by at least 20% from recent lows, often accompanied by increased investor confidence and expectations of continued growth.

In a bull market, positive economic indicators such as strong GDP growth, low unemployment rates, and rising corporate profits tend to bolster optimism among investors, encouraging more buying activity. This environment can foster a self-reinforcing cycle, where rising prices lead to further buying as investors seek to capitalize on the upward momentum in the market.

The other options represent different market conditions. A declining market signifies bearish sentiment, where prices are falling, and stagnant prices indicate a lack of decisive movement in either direction. High volatility refers to significant price fluctuations, which can occur in both bull and bear markets but does not inherently denote a rising market. Thus, recognizing that a bull market is specifically characterized by rising prices is key to understanding its dynamics.