In market parlance, the term “bullish” is used to describe a situation where market prices are expected to rise or are already rising. The opposite of this is “bearish”. These terms are used quite commonly in the stock market and in other trading scenarios to showcase their beliefs and emotions about the direction of the market and specific assets.
Recently, there have been several groups that turned bullish which might influence the direction of various markets. Let’s delve into who they are, why they’ve turned bullish and what this could mean.
1. Active Traders Group
Active Traders group comprises individuals who engage in the buying and selling of securities for personal account at least six times a day. They are known for their directness and confidence in dictating market trends. The recent shift from a bearish to bullish stance is a result of dwindling market volatility and an uptick in market sentiment. With the boost in economic growth, stocks have surged and warrant bullish sentiment. Their change of heart signifies potential for robust market performance.
2. Retail Investors Group
Retail investors are those who buy and sell securities for their personal account, and not for another company or organization. Recently, due to their bullish stance, there has been a marked increase in the stock market participation. A surge in novel retail investors is often regarded as validation of a bull market. One reason they have turned bullish is due to increased disposable income, and more investing knowledge due to widely available resources.
3. Institutional Investors Group
These are investors like pension funds, endowment funds, insurance companies, mutual funds, and hedge funds. They have also shown a bullish stance, primarily driven by the steady performance of blue-chip stocks and mega-cap technology companies. As these are typically the go-to sectors for institutional investors due to their stability and potential for long-term growth, their bullish outlook is significant.
4. Financial Analysts Group
Consisting of financial advisors, strategists, and other experts who study market trends to make predictions, this group had been bearish amidst the pandemic-induced economic uncertainty. However, robust corporate earnings coupled with better-than-expected economic data have led to a wave of upgrades and bullish outlooks.
5. Government-backed Investment Groups
Several government-backed investment groups, like sovereign wealth funds, have turned bullish too. With various governments around the world announcing financial stimulus packages to revive economies hit by the pandemic, these funds are now expecting a good return from markets.
These groups turning bullish may influence the market in various ways. For one, they boost market sentiment by spreading optimism. Their shift can also lead to an increase in trading volumes, which further fuels bullish sentiment. Lastly, their change in stance can cause changes in market structure.
However, keep in mind that market sentiment isn’t the be-all and end-all of investment decisions. It may give a general idea about the stock market’s current environment, but it isn’t foolproof. A sudden change in economic conditions, corporate developments or geopolitical scenarios can quickly shift market sentiment. Therefore, a diversified investment approach, based on ample research and considered advice is always a more viable strategy. But for now, the bulls are indeed running the show.
