Factors responsible for bear market

© John Efetobor. All Rights Reserved

The bear market is the interval in the capital market characterized by falling prices for securities. It is a period that separates the men from the boys in the art of stock trading; it is the season when investors who are unsure of the reason why they hold a stock sell out of panic. It is a period when most of the prognosis of stockbrokers and experts are thrown into the winds and are torn into shreds. I am amazed at the way most investors are taken unawares by the bears; it ought not to be, because there are always loud signs that always herald a bearish season, unfortunately, only the seasoned stock traders doing Intelligent Stock Trading. that are able to see them afar off.

I want to show you warning signs you should look out for, that should prepare you before the bear market sets in, remember there will always be a bull and bear market as long as the forces of demand and supply continue in the capital market.


Massive profit taking

Profit taking is the name of the game; stock traders generally look forward to selling off their stocks once their objective for buying into a stock is achieved, but when this action is carried out en masse it can trigger off a bearish session. During the bull market stock traders take advantage to sell of their stocks, the massive shedding will eventually have its toll, so watch out when you observe there is massive effort by stock traders to sell their stocks, know the bear market will come knocking.


Active and prolong primary market activities

The primary market is the other half of the secondary market, both markets function in diverse ways. The primary market is where the vast majority of investors do business, the reason is not farfetched; it is an all comers market. For this reason whenever there is prolong activities in the primary market, in other word, if there are so many initial public offerings and private offerings, investors will channel their funds to the primary, sometimes they may even withdraw their funds, the effect there will be more sellers in the secondary in the secondary market than buyers, supply will outperform demand thereby driving down the prices of shares.


Massive panic selling by emotion driven investors

One of the feature of a bearish a bearish market, is the reaction of emotion and sentiment driven investors. The bearish season over the years from my experience analyzing and trading stocks have always beaten uninformed investors who have not imbibe the entry and exit strategy that I know has most of the time protected wise and seasoned stock traders. When the vast majority observes that the prices of stocks are rallying down they react by selling off their which affects the stability of the secondary market.

The bear market when fully understood can be a great opportunity for wise and seasoned investors to create wealth. Remember during the bear market, you can easily find stocks which had been hitherto scarce and expensive available and affordable. During the bearish market, you will find securities with very sound fundamentals selling below their real value, which means if had prepare yourself in anticipation of a bear market by your understanding of the activities discussed above, you could be your way to making awesome profits.