Market movements can be divided into two very simple phrases: bullish or bearish. The reasons behind these two phases are many, but what matters most to investors is how the markets evolve and how to interpret these two phases, always keeping in mind that you can win and lose money in both cases. Let us dwell on what happens during the hikes.
Beware Of The Bull
We speak of the bull market (ตลาดกระทิง which is the term in Thai) when a prolonged rise in the markets occurs, and we oppose it to a bearish phase called the bear market in jargon. They are so-called because the attacking movement of the bull, the blow of horns, is done from the bottom to the top while the bear attacks with its legs from top to bottom. By convention, the bullish phase lasts five years. It should not be confused with what technical analysis calls secondary movements, i.e., phases of increase that last from a few weeks to a few months, or even with tertiary phases, ranging from several weeks to several months.
The Accumulation Phase
In the case of the bull market, as explained by the basis of technical analysis, we observe a series of increasing maximum and minimum oscillations. The first phase of the bull market is that of accumulation, during which sentiment in the market is dominated by pessimism since a downward movement has just been recorded. The volume of transactions is relatively low, but the first signs of movement are appearing. At this stage, professional speculators are preparing to buy securities at moderate prices from demoralized investors.
The Intermediate Phase
On the macroeconomic and financial level, the news is positive, and we can also speak of market euphoria. Prices are continually rising, purchases follow one another, and all professional investors have already taken a position or are hastening to do so.
The Distribution Phase
The last step in the upward trend is distribution. Investors are still active and vigilant, but they are starting to act more cautiously, to defend their position, and to “cover” the investments made until then. The general feeling is that the chances of making a profit are lower than in the previous phase and that volumes, which remain at high levels, are starting to decrease. The professional investors begin to sell to realize the bulk of earnings, and, in general, most non-professional investors begin to enter.