Market Sentiment is the overall consensus about a particular security or market in general. This can be one of Bullish, Bearish or Correction.
A bullish sentiment describes a market condition when prices are on the rise or expected to grow. The phrase usually refers to the stock market but can also be applied to any security in markets like asset classes, bonds, commodities, or real estate.
While there’s no hard and fast rule to designate a bull market, typically, a market is considered a bull when stock prices rise by 20% or more after a 20% decline and before another 20% drop.
Bull markets are long-term trends and usually last several months or years.
A bearish market sentiment is one that is in a prolonged period of decline in security prices. Typically, a market is considered bearish when prices of security falls 20% or more from their 52-week high.
A correction market sentiment is a decline of 10% or more in the price of a security from its most recent peak. Corrections can happen to individual assets, like an individual stock or bond, or to an index measuring a group of assets. Corrections can last anywhere from days to months, or even longer.
While damaging in the short term, a correction can be healthy , adjusting overvalued asset prices and providing buying opportunities.