Dow Theory classifies stock market trends into long-term, intermediate, and short-term. The long-term trends are further divided into long-term upward trends and long-term downward trends. Dow Theory names these two market conditions: long-term upward trends as bull markets, and long-term downward trends as bear markets. Bull and bear markets each have distinct characteristics. Below are common questions investors typically have about bull and bear markets:

1. Why are long-term upward trends called bull markets, and long-term downward trends called bear markets?

One reason is that bulls' eyes look upward, while bears' eyes look downward. Thus, a bull market represents continuously rising prices, while a bear market signifies continuously falling prices. Another explanation suggests that bulls charge forward aggressively, like in Spanish bullfighting, symbolizing a surging market. Bears, on the other hand, are fearsome creatures whose appearance causes panic, representing a plunging market. Regardless of interpretation, investors today universally understand that a bull market means a major uptrend, while a bear market means a major downtrend—this is now common knowledge in stock markets.

2. How long do bull and bear markets typically last?

There's no fixed rule. Some exceptionally long bull markets can last decades, with stocks continuing to rise steadily. Major bear markets, based on economic data analysis, generally don't last too long—the longest typically not exceeding five years. Generally speaking, bull markets may last about five years on average, while bear markets tend to last around two years.

However, arbitrarily guessing the duration of bull or bear markets is unwise. Investors should instead observe market developments to determine whether the current trend is bullish or bearish, or whether the existing trend persists. Using analytical indicators to assess market conditions is far superior to making speculative guesses. Objective analytical indicators provide much more reliable determinations of bull or bear markets than subjective assumptions.

3. Are bull and bear markets two extremes that cannot coexist?

The answer is yes. According to Dow Theory, a bull market is purely a bull market—there cannot be a bear market within a bull market. Similarly, a bear market is purely a bear market—there cannot be a bull market within a bear market. Therefore, during bull markets, occasional declines are merely corrections—intermediate-term market conditions rather than long-term trends. The same applies to bear markets: occasional rises during bear markets are rebounds, not sustained uptrends. There are no bear markets within bull markets (declines are called corrections), and no bull markets within bear markets (rises are called rebounds). Bull and bear markets are absolute opposites and cannot coexist.