Bull Market

The Bull Market — Primary Uptrends are usually (but not invariably)
divisible into three phases. The first is the phase of accumulation during
which farsighted investors, sensing that business, although now
depressed, is due to turn up, are willing to pick up all the shares
offered by discouraged and distressed sellers, and to raise their bids
gradually as such selling diminishes in volume. Financial reports are
still bad — in fact, often at their worst — during this phase. The
“public” is completely disgusted with the stock market — out of it
entirely. Activity is only moderate but beginning to increase on the
rallies (Minor Advances).
The second phase is one of fairly steady advance and increasing
activity as the improved tone of business and a rising trend in corporate
earnings begin to attract attention. It is during this phase that the
“technical” trader normally is able to reap his best harvest of profits.

Finally, comes the third phase when the market boils with activity
as the “public” flocks to the boardrooms. All the financial news is
good, price advances are spectacular and frequently “make the front
page” of the daily papers, and new issues are brought out in increasing
numbers. It is during this phase that one of your friends will call
up and blithely remark, “Say, I see the market is going up. What’s a
good buy?” — all oblivious to the fact that it has been going up for
perhaps two years, has already gone up a long ways, and is now
reaching the stage where it might be more appropriate to ask, “What’s
a good thing to sell?” In the last stage of this phase, with speculation
rampant, volume continues to rise, but “air pockets” appear with
increasing frequency; the “cats and dogs” (low-priced stocks of no
investment value) are whirled up, but more and more of the top-grade
issues refuse to follow