Three Phases of Bull Markets: 

In the first there is gloom and doom everywhere. Financial reports are negative and people are sure that stocks markets will close down.  No one wants to talk stocks.  Slowly the economic activity begins to improve but people still believe it is temporary and worst is still to come. Farsighted and Shrewd players start getting in. Slowly markets pick up speed.  

In the second phase economy is growing.  People now think stocks are less risky than they were when markets were down and start getting in. Good news keeps coming and earnings keeping increasing. This is the phase when a technical trader gets in as he is now sure the Major trend is up.  

In the last phase everyone is buying stocks. Economy is in overdrive and people buy as if there is no tomorrow. Your Friends recommends you stocks and every stock is going up- doesn’t matter if the company doesn’t exists. Jholar Finance start hitting upper circuits. No one cares what the company does. Volumes reach their peak and more and more stocks make new highs. Smart money starts to get out here. First-time investors rush into the markets having heard stories of profits made overnight.

This is when the peak comes. Suddenly investors are trapped. There are no buyers at higher levels. Few start selling. A correction begins.

Three Phases of Bear Markets:  

The first phase appears to be just a correction. Most people are still bullish and are willing to buy at lower levels. After an initial correction markets rise again. But somehow they fail to cross the previous highs. News flow slowly turns negative. Bulls now start getting nervous. Another phase of selling begins.  

The second phase starts. Buyers keep vanishing as news flow grows worse and earnings disappoint. More and more of investors want to sell and prices keep falling. Every rise is short lived and selling comes again.  

The final phase is of total panic (Remember 2008-2009). Many times triggered by some event. People get totally frustrated with stocks and sell at what ever price they get. All are scared to buy. “Stock Market” becomes the most hated word.  

In midst of all doom and gloom another bull market starts

And the cycles continue……………………………………..