Market Cycles

Markets tend to move in cycles including bullish cycles and bearish cycles. A bull market is a consistent upwards trend and a bear market is a consistent downwards trend. Studying market cycles may allow an investor to make better informed decisions about when to enter or sell a position.

For shorter corrections, market fear and greed indexes can help determine when the market is overbought (extreme greed) or oversold (extreme fear).

Although past price-action history cannot predict future outcomes, correctly identifying cycles can lead to significantly more gains if one is long during bull cycles and short during bear cycles. Short-selling is betting against an asset for a certain time period.

However, many economists and financial analysts believe it is not possible to time the market and that simply investing in the market over time will lead to better performance. Many financial analysts chase alpha, or return above that of the benchmark. Yet, most analysts, no matter how experienced, typically fail to beat the market over time.