A bull market is a sustained rise in prices, usually discussed in terms of a broad stock-market index. The common rule of thumb is a gain of at least 20% over at least two months, but Investor.gov presents that as a general convention—not a legal or universal definition.
To measure one responsibly, identify the market and index, record the starting and ending dates and levels, and say whether the result is a price return or a total return that includes dividends. Different choices can produce different answers about when a bull market began and how large it was.
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What a bull market means
“Bull market” describes a market trend: prices are rising for a sustained period and investor sentiment is generally optimistic. It does not automatically describe the economy, corporate profits, employment, or household finances. A country can have a rising stock index while parts of its economy are weak, and an expanding economy does not guarantee that every asset market is rising.
The phrase also needs an object. A bull market in U.S. large-company stocks is not necessarily a bull market in small-company stocks, bonds, commodities, property, or a foreign market. Say which asset class and benchmark you mean instead of referring vaguely to “the market.”
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Investor.gov, the U.S. Securities and Exchange Commission’s investor-education site, states: “Generally, a bull market occurs when there is a rise of 20% or more in a broad market index over at least a two-month period.” The wording matters. “Generally” signals a convention, not a binding standard, and the definition does not mandate one index, one closing-price rule, or one cycle-counting method.
How the 20% measurement works
For a simple index-level calculation, use percentage change:
(ending index level ÷ starting index level − 1) × 100
For example, suppose a hypothetical broad index is 4,000 on the stated starting date and 4,800 on the stated ending date. The calculation is (4,800 ÷ 4,000 − 1) × 100 = 20%. If those observations are at least two months apart, the move meets the familiar rule of thumb for that index and period.
A clear report would say something like: “The index’s price level rose 20% from 4,000 on the starting date to 4,800 on the ending date over at least two months.” That sentence identifies the levels and period without implying that every stock or market rose by 20%.
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What counts as the starting point
There are two common ways to choose a starting point, and they answer different questions.
- Threshold test: measure a 20% increase over a selected period, often beginning at a recent low. This is the straightforward interpretation of the Investor.gov convention.
- Cycle measurement: define a bull run as beginning at the trough after a bear-market decline and ending at the next significant peak. Historical market presentations often use this approach when describing an entire cycle.
A market can be 20% above a recent low while still below its previous record high. Conversely, a market may set a new high without having risen 20% from the particular date you selected. A report must state which framework it uses rather than silently switching between them.
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The general definition includes a minimum period, but it does not prescribe whether an analyst must use calendar-month endpoints, trading-day closes, intraday prices, or a particular data vendor’s series. Choose a consistent rule, state the exact dates, and use it throughout the comparison. Mixing an intraday low with a closing high can make a gain look larger than a close-to-close calculation.
Choosing an index: “the market” is not one number
Your index determines the population of companies represented by the calculation. The SEC describes the S&P 500 as a capitalization-weighted index of 500 stocks intended to represent leading U.S. companies. The Wilshire 5000 is intended to measure the entire U.S. stock market. Those benchmarks can produce different returns because their universes and weightings differ.
The Dow is another named U.S. stock index and, like the S&P 500, has both price-return and total-return versions. It represents a different slice of the market than a broad-market benchmark. A statement that “the market entered a bull market” is therefore incomplete unless it names the index.
| Index or series | What it is intended to represent | Why the choice affects the result |
|---|---|---|
| S&P 500 | 500 stocks, capitalization-weighted, intended to represent leading U.S. companies | Large companies receive greater weight, so their performance has more influence than that of smaller constituents. |
| Wilshire 5000 | Intended to measure the entire U.S. stock market | A broader universe can behave differently from a large-company index. |
| Dow | A separate U.S. stock-market index with price-return and total-return versions | Its scope and construction differ from broad-market indexes, so its 20% move is not interchangeable with another index’s move. |
When comparing two measurements, keep the observation dates identical and identify each index’s universe and weighting. Otherwise, an apparent disagreement may simply reflect that the benchmarks are measuring different markets.
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An index can be quoted as a price-return series or a total-return series. A price-return index tracks changes in constituent prices. It does not add dividend income. A total-return index includes stock-price movements and assumes dividends are reinvested, so it measures a different result.
The S&P 500 and Dow each have price-return and total-return versions. If a price index rises 20%, that does not mean an investor who held every constituent earned exactly 20%; dividends, taxes, fees, trading costs, and implementation differences are outside that price-only figure. A total-return series may show a larger percentage over the same dates because reinvested dividends are included.
| Measurement | Included | Use it when |
|---|---|---|
| Price return | Change in quoted security prices | You are describing the movement of the index level itself. |
| Total return | Price movement plus reinvested dividend income | You are comparing the index’s hypothetical reinvested investment performance. |
Never compare a price-return gain for one index with a total-return gain for another as though they were equivalent. Label the series in the headline, table, chart, and accompanying text.
Measuring a bull-market cycle from trough to peak
For historical analysis, define the cycle before calculating its duration or cumulative return.
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- Choose the benchmark. Name the index and specify whether it is price return or total return.
- Identify the trough. State whether you use the lowest closing level, an intraday low, or another documented low after a prior decline.
- Identify the endpoint. Use the next peak under the same observation rule, such as a closing high.
- Calculate the gain. Apply
(peak ÷ trough − 1) × 100. - Calculate the duration. Report the exact start and end dates. Do not describe a cycle as lasting a particular number of months without saying how partial months were handled.
Another source may select a different trough, peak, index, or return series for the same broad episode. Its duration and cumulative gain can therefore differ without either calculation being arithmetically wrong. There is no single binding cycle-counting protocol in the general Investor.gov definition.
How a bear-market definition relates to a bull market
FINRA describes the familiar bear-market convention as a decline of 20% or more, while contrasting it with a large price increase for a bull market. The two labels are not perfect mirror images in every historical database. A bull phase may be measured from the low after a bear decline, but the 20% rise convention can also be applied to a selected low that is not formally designated the end of a bear market.
That is why a market can satisfy a 20% rise test and still be below its earlier peak. The label tells you about the chosen movement and methodology; it does not certify that a previous decline has been fully recovered.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.A practical checklist for reporting a bull market
Use this checklist whenever you publish, quote, or evaluate the label:
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- Name the asset class, country or region, and exact index.
- State whether the series is price return or total return.
- Give the starting date and index level.
- Give the ending date and index level.
- Show the percentage-change formula or arithmetic.
- Explain whether the start is a recent low, a post-bear trough, or another selected date.
- Confirm that the interval meets the stated minimum period if you are applying the 20%-over-two-month convention.
- Use the same dates, index definitions, and return type when comparing markets.
- Identify whether levels are closing prices or another observation type.
This level of detail prevents a headline from making a narrow index move sound like a rise across every stock or every household’s portfolio.
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Common mistakes and how to avoid them
Calling any 20% gain a universal bull market
The 20% figure is a widely used convention, not a statute or official worldwide rule. Present it as “the common rule of thumb” and name the benchmark.
Leaving the index unnamed
“The market” could mean the S&P 500, Wilshire 5000, Dow, a regional index, or an asset class other than stocks. An unnamed benchmark makes the claim impossible to reproduce.
Mixing price and total returns
Dividends change the measured result. Check the series label before comparing charts or quoted percentages.
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A 20% increase from a trough is not the same as being 20% above the previous peak. State which reference point you used.
Treating the label as a forecast
A bull-market designation describes past or current price behavior. It does not guarantee future gains, prove economic growth, or recommend buying a security.
What the label means for an individual investor
The label is primarily a description of market history and measurement. Before drawing a personal conclusion, check what your own holdings represent. A portfolio concentrated in smaller companies, foreign shares, bonds, or cash may not track the index being called bullish. Even a fund designed to follow an index can differ because of expenses, sampling, cash balances, taxes, and trading timing.
Use the bull-market statistic to understand the benchmark’s path, not as a promise about your account balance. If you are comparing your performance with an index, match the index universe, dates, currency, and price-versus-total-return basis as closely as possible.
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Bottom line: the shortest accurate definition
A bull market is a sustained rise in a specified market. For stocks, the commonly cited convention is at least a 20% increase in a broad index over at least two months. To measure it correctly, identify the index, dates, starting point, endpoint, observation rule, and whether dividends are included. Because those choices are not universal, two carefully calculated bull-market figures can differ while both accurately describe their stated methodology.
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