Bull market is referred to as the scenario in the stock market where the share prices are on upward trend or are anticipated to rise. It can also be applied to other assets such as currencies, commodities, bonds and real estate.
Before understanding Bull market in detail, let us first understand the marketplace: Stock Market.
Whenever a business or a company is in need of excess funds for expansion or growth, it has primarily two options. First, to ask the private lenders or a few institutions for the humongous amount of money which has its own pros and cons.
The second option is to ask the general public with a small amount each to cater to this capital raising. Again, this method also has its own pros and cons. But it is a relatively preferred way primarily due to less concentration of management power going in a few hands.
The stock market is a virtual marketplace for corporations who need extra capital and people who have extra capital or savings are willing to lend it to these corporations.
But once the money has been channelized from lenders to the corporations, another major function of the market comes into the picture which is transacting the existing issued securities between lenders.
These securities can be traded between lenders at their own demanded prices.
Now, there are many intricacies in the stock market like primary market and secondary market, different types on securities that can be issued to raise money, regulations and legal structure to perform various activities etc. Here we are going to look at how the price of these securities move and how it triggers a specific direction of a bull market.
As mentioned earlier, apart from issuing securities for raising capital, the stock market also facilitates the buying and selling of already issued securities. This frequent buying and selling of securities constantly move the prices up and down based on demand and supply of those securities.
This price fluctuation works with respect to the basic economic law of supply and demand, which states the higher the price, lower would be the demand and vice versa. In other words, higher demand will increase the prices, and higher supply would decrease the prices.
There are a few times when the demand for a security or a broader market is so strong and consistent among the masses that it’s price keeps on increasing for an extended period of time. Although it is difficult to estimate the time period for which the market would rise, and there is no hard and fast rule as to the minimum time for which it should rise, a few months of consistent rise preferred.
The enthusiasm amongst buyers is so high that no amount of supply is able to withstand the excessive demand resulting in a continued increase in the price. The demand can be high due to sectoral trends, overall economic scenario, political uplift and overall investors’ sentiments.
Some quantitative measures are also available to measure a bull market in an objective way which does not take any discretion or less of it into consideration.
One such measure is to use retracements which does not take time into consideration but accounts for a set percentage of the price move.
Usually, when the market rises by more than 20% from a major or significant low point, preferably after a bear market, then it is termed as a bull market. Similarly, after a significant high, if the market drops by more than 20%, the bull market is said to be over.
Another method is to use a 200-day moving average, which is a very common method amongst individual stocks to gauge the bull market. It is a relatively easier way due to its 100% objective nature. To simply put, if the stock or market is trading above its 200-day moving average then its’ quoted as a bull market and below this average, quotes a bear market.
As a bull market lasts for a few months/years, to say the least, the price rise does not take place out of thin air. There are quite a lot of strong positive fundamental changes taking place, backing up the excessive demand. It’s not in the hands of a few people to take the prices higher on their own for a long duration; definitely, mass participation takes place behind the scenes which generally comes on the back of some fundamental changes.
These changes could be
When the market keeps on rising for an extended period, there are two basic strategies which one can use that are very effective in this kind of market.
This is a favourite strategy for the long-term investors who are not fond of frequent entries and exits based on the price, which a trader does. It essentially means to buy the stock and holding onto it for a few years till a significant drop is witnessed, or the fundamentals start to change.
When the market is in a bull run, and almost everyone wants to participate in this rally, a mere buy and hold strategy can do wonders.
In a bull market, almost every dip (correction from a peak) is bought into and the stock starts rising again. Rarely do we see a significant dip to enter the long position, but those dips are a sweet spot to enter an ongoing bull market. There are many ways to identify dips in a bull market by using indicators and other parameters to buy the stock or add more quantity on the way up.
Difference between actual and an expected return. For example, if a stock increased by 7% because of some update, but the average market only increased by 3% and the stock has a beta of 1, then the abnormal return was 4% (7% - 3% = 4%)
Refers to most commonly the realty sector and indicates the rate of sale of homes in a certain market during a given period of time. It is calculated as the ratio of the average number of sales in a month by the total number of available homes.
A candlestick pattern which occurs when a bearish candle on 2nd day closes below the middle of bullish candle of 1st day. The pattern is formed by a down candle preceded by an up candle. One of the key aspects of this pattern is that both the candles should be pretty large, demonstrating strong interest and participation of investors and traders.
What is the Dark Web? The dark web is one such portion of the World Wide Web which is not accessible by regular search engines. The dark web is considered a hotbed for criminal activities, and it is much more than that. Various websites exist on an encrypted network inside the dark web. Standard web browsers and programs cannot find these websites. Once inside the dark web, different sites and pages can be accessed like one does on the web. Scientists believe that the internet we see is only 4% of the entire ocean of the web, meaning the 96% consists of the "Deep and Dark Web". The user interface used in the dark web is usually internet-based, but it utilises special software which is not part of the standard ones. There are dozens of web browsers to surf the internet, but they all work in the same way. These standard browsers use ports and protocols to request, transfer and view data on the Internet. The website you access may look familiar, but as you enter, it may be illegal or something familiar but otherwise not monitored by anyone else. Therefore, the deep web and the dark web are famous for being anonymous. Also read: Cyber Espionage Campaign: Strings that tie China, Australia and the US How to access dark web browser? In order to access a few areas which are restricted, the user may need a password and a process to follow. A special software called TOR (The Onion Router) or the Freenet has these non-standard connections. These browsers are unlike standard internet browsers and have a process to access. They allow the users to browse around the dark web and are focused on keeping the user identity anonymous. If hacked or accessed, the regular web browser can easily provide user information such as who the user is and whereabouts. Though the dark web is providing 100% anonymity, federal agencies have been successful in tracking down criminal activities on the dark web. It is often said that the person you are talking to on the dark web could either be an FBI agent or a criminal. Image: Kalkine What happens inside the world of the dark web? The dark web is famous for allowing sinister activities, but many users go on the dark web to access information which otherwise may not be accessible on standard internet. Such as users from extremely oppressive governments who cut access to the world for their citizens. Unfortunately, such confidential environments also provide open platforms to criminals, terrorists and other such individuals involved in illegal activities. Hence, experts advise users to not access the dark web even out of curiosity as it is a lawless environment. There have been many incidents where innocent, curious users were trapped and forced to get involved in criminal activities or their digital devices hacked and compromised without their knowledge. A study conducted by a University of Surrey researcher Dr Michael McGuires in 2019, Into the Web of Profit, shows that the dark web has become worse in recent times. Since 2016 of all the listings on the dark web suggested, 60% could harm companies. Everything illegal and criminal can be found on the dark web, it also has other legitimate options such as chess clubs or book clubs, but because of the anonymity, the user will not know whom he/she is interacting with. Inside the dark web, anonymity and lawless nature make the crimes which exist otherwise in our society hard to trace. The payment procedure inside the dark web is also different from the World Wide Web. Most often, Bitcoin and Monero cryptocurrency are used for the transactions. RELATED READ: Knock Knock! Cybercriminal at Your Doorstep What’s the difference between the deep web and dark web? The dark web is part of the entire deep web and is hidden from regular browsing access. Most people confuse the deep web and the dark web as one entity. It is not. The deep web content includes anything hidden and restricted behind the security wall such as content which otherwise requires paywall or sign-in or blocked by the author. Content which cannot be easily accessible on regular internet such as medical records, membership websites, paid content are available on the deep web; hence it is also called Invisible Web. No one really knows the total size of the internet, but the experts believe that the standard World Wide Web consists of only 4% internet, the deep web consists of 90% and dark web consists of 6% of the entire internet. ALSO READ: Technology has changed the way we work amid the COVID-19 crisis: A look at in-demand technologies Image: Kalkine Also read: It happens again, NZX being bullied by Cyber-attackers- Down for the fourth day What kind of risk companies face due to the dark web? The Into the Web of Profit report listed below threats various organisations around the world are facing, especially the ones who have weak or insufficient cybersecurity measures. Malware attacks Distributed denial of service (DDoS) attacks Botnets Trojan, keyloggers, exploits Espionage Credentials access Phishing Refunds Customer data Operational data Financial data Intellectual property/ trade secrets Also read: Cybersecurity and the Requirement of a Resilient Environment in Australia Are there advantages and disadvantages to the dark web? The dark web provides complete anonymity, the users get complete privacy to perform any activity, be it illegal or legal. Many countries in the world still have authoritarian regimes offering no civil rights to their people. To such oppressed lot, the dark web provides an opportunity to access news, information, data and also express their views. The dark web is also a perfect place for law agencies to map criminal activities while being undercover. It is also easy to commit gruesome crimes through the dark web as it is complicated and lawless. Criminals can easily use the dark web to compromise someone's privacy, steal data or private information or even hire someone to commit murder. Do internet users need to be concerned about the dark web? The simple answer is no unless the user is using the dark web. Study says that most young people visit the dark web out of curiosity. They do not want to indulge in any criminal activity but want to see how the hidden and secret world of the dark web operates. And that is where the possibility of the electronic device IP address getting hacked by other criminals to perform their criminal activities lies. The earliest use of darknet dates back to the year 2000. Freenet was created at the University of Edinburgh based on a student research paper. Ian Clark wrote the paper in 1999 on the possibility of such an encrypted internet base. Freenet was created to oppose censorship and provide a platform for free speech. The most powerful dark web is TOR, and it was created by the United States government to have a secure encrypted communication in case of emergency and complete disaster. Even today, many law agencies are secretly active inside the world of the dark web to gain access in the criminal world and stay one step ahead.