Since 2009, the stock market has been bullish, and for numerous financial experts, there is no end in sight for the trend.
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| Image source: blog.wallstreetsurvivor.com |
This is good news for many investors and the market. A bullish stock market means more trading movement and plenty of opportunities for profit. A strong market also boosts employment rate and disposable income for the larger economy.
However, the beginning of the bull market is not always apparent to the regular stock investor. One needs to have a keen eye and ability to analyze trends in order to know if there is bull market in the horizon. Some of the signs to look for are the following:
Index of Leading Economic Indicators (LEI)
One of the most accurate ways of determining whether the stock market is on the rise or receding is to check the LEI. The index is a combination of many factors, including stock prices, real M2 (measure of money supply), index of consumer expectations and many more. Increasing or above average LEI, especially after hitting the bottom, is an indicator of a bull market.
General pessimism on stock market
The first phase of a bull market is marked by pessimism from investors and the media. During these times, stock prices decrease to a point where the cost outweighs investment risk. It results in investors beginning to buy stocks again and sustaining earnings.
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