Market trend

A market trend refers to the general direction in which financial markets appear to move over time. Analysts distinguish between long-term, medium-term and short-term movements, and traders often attempt to interpret these tendencies using technical analysis. Trend identification relies on observing price patterns, especially sequences of higher highs and higher lows for an upward trend, or lower highs and lower lows for a downward trend. Because future price movements are unknown, trends can only be confirmed retrospectively, making market interpretation an exercise in informed probability rather than certainty.

Market Terminology

Upward and downward market movements are commonly described as bull markets and bear markets. These terms originated in eighteenth-century London’s Exchange Alley, where short sellers were labelled “bears” and buyers on credit became known as “bulls”. The metaphors were reinforced by the imagery of a bear striking downward and a bull charging upward, symbolising declining and rising prices respectively.

Secular Trends

A secular trend is a long-term movement lasting five to twenty-five years and comprising multiple primary trends. In a secular bull market, upward trends dominate and downward movements are comparatively brief. The United States equity market is often viewed as having undergone a secular bull phase from the early 1980s until around 2000 or 2007, despite sharp interruptions such as the 1987 crash and the early-2000s downturn. A similar long-running upward trend occurred in the commodities market during the 2000s.
By contrast, a secular bear market is characterised by dominant downward pressure punctuated by shorter upward recoveries. Gold experienced such a period from 1980 to 1999, culminating in a pronounced low point often referred to as the “Brown Bottom”. The stock market decline from 1929 to 1949 is another example often cited in this category.

Primary Trends

Primary trends encompass broad market movements lasting a year or longer and form the building blocks of secular trends.

Bull Market

A bull market is marked by rising prices and a gradual shift in sentiment from pessimism to optimism and eventually euphoria. A widely used benchmark defines the start of a bull market as a rise of 20 per cent above a previous low, although some analysts argue that a bull market cannot occur while the broader market remains in a bearish phase. Historical analysis indicates that, from 1926 to 2014, typical bull markets lasted around eight and a half years and generated total returns averaging more than 450 per cent.
Notable bull markets include the expansions of 1925–1929, 1953–1957 and 1993–1997. India’s BSE SENSEX also experienced a particularly strong bull market between 2003 and 2008, increasing by more than sixfold.

Bear Market

A bear market involves a price decline of 20 per cent or more over a sustained interval, accompanied by a shift in sentiment from optimism to fear. Indicators include increased market volatility, falling consumer confidence and deteriorating economic expectations. Average bear markets between 1926 and 2014 lasted about thirteen months with cumulative losses of around 30 per cent.
Historical examples include the collapse beginning in 1929, which erased nearly 90 per cent of the Dow Jones Industrial Average by 1932, and the prolonged downturn between 1973 and 1982. More recent bear markets include the 2002 decline, the 2007–2009 global financial crisis, the downturn associated with the COVID-19 pandemic in 2020 and the bear market triggered by inflationary pressures and rising interest rate expectations in 2022. In 2025 the United States market again entered bear territory due to heightened trade tensions and tariff policy.

Market Top

A market top denotes the highest level reached before a prolonged or significant decline. These peaks are rarely recognisable in real time and are instead identified retrospectively. Analysts often associate market tops with several “distribution days”, in which major indices fall on higher-than-average trading volume.
Examples include the technology-driven peak of March 2000, when the NASDAQ-100 reached its highest point before the dot-com collapse, and the October 2007 peak preceding the global financial crisis.

Market Bottom

A market bottom signals the end of a downward trend and the beginning of a recovery. Identifying a bottom in real time is difficult, and short-lived rebounds can mislead investors attempting to time entry points. A rise of 20 per cent from a low is often used as a retrospective indicator that a bottom has passed.
Notable market bottoms include the recovery following Black Monday in October 1987 and the low of October 2002 after the early-2000s downturn. These points marked major reversals that initiated subsequent bull phases.