Stock Market Conditions

Stock Market Conditions

9 min read

Market conditions rule the trading world. If conditions are bad, trading can be difficult. When the markets are good, trading is easier. Study them, and take advantage of them as much as possible when trading.

There are many things that affect market conditions. Read more below to learn what affects the markets and how you can be prepared.

  1. What are market conditions influence?
  2. Economy: whether it’s up or down.
  3. Monetary and fiscal policies affect economy which affects markets.
  4. Interest rates also affect economy and market conditions.
  5. Employment numbers move the markets.
  6. Inflation affects the economy and the markets.
  7. Demographic changes affect cities and states which can have a domino effect.
  8. Politics have huge consequences to the market.
  9. Energy affects a lot of different areas including the market.
  10. National security influences the market.
  11. Natural disasters effect many things including the stock market.

Market conditions are very important to take note of. A lot of new traders just focus on charts because they are a visual representation of the market that gives one a false sense of understanding.

The only way to make sense of your charts is to also understand the other less easy to read aspects of the market, that we will cover here. It’s together, charting AND keeping up with current market conditions that you’ll learn to trade profitably and stress free.

variety of market conditions affect what, when, and how you trade. Focusing on individual instruments only gets you so far. Looking at the market in its entirety is helpful.

Different types of market conditions require different stock trading strategies. Therefore, it’s important to recognize the conditions and what causes them.

Microeconomics and Macroeconomics

Microeconomics focuses on small-scale economic factors; like decisions made at the individual or company level. However, though sounding small, it’s an important focus for traders.

A choice made by one individual or company can still make a big dent. And it especially matters if you trade that company’s stock. Therefore, traders engage in microeconomics regularly.

No less important is macroeconomics since it plays a big factor in how to determine market conditions. Macroeconomics focuses on the economy as a whole.

In other words, it’s the big picture. Macroeconomics takes into account phenomena such as GDP, inflation, unemployment, and consumer confidence. Notably, it’s these things that influence whether the market is bullish or bearish.

The Great Depression is an excellent example of the power of macroeconomics. The stock market crashed. Bank runs ensued. People lost savings and properties.

Prices dropped. Unemployment soared. Suddenly, people who partied during the Roaring 20’s found themselves destitute. I remember learning about this era as a young child.

Back then, I wondered how a stock market crash could result in so many people living in Hoovervilles and standing in soup lines. However, now I understand that it all interconnects.

Economists typically divide macroeconomics into three categories: leading, lagging, or coincident. Leading indicators pertain to future events. In other words, where the market is going.

Meanwhile, coincident indicators occur at the same time as the event and signal the market conditions today. Lastly, lagging indicators follow after an event. Therefore, lagging indicators confirm patterns, while leading indicators speculate trends.

Ranging and Trending Markets

Two types of market conditions are ranging and trending.

Range-Bound Market

A ranging market goes sideways for the most part. It goes up a little and down a little without really moving past support or resistance levels.

Therefore, until something sparks the market, it travels within a channel of support and resistance boundaries. Once a range finally enters the breakout stage, large volatile moves may occur. Additionally, these initial moves may be quite unpredictable.

Trending Market

When the price is going in one direction, the market is trending. If the price is rising, then it’s an uptrend. An uptrend exhibits higher highs and higher lows.

Conversely, if the price is falling, then it’s a downtrend. During a downtrend, you see lower lows and lower highs.

The two most famous types of trending market conditions are bull and bear markets. A bull market is robust with prices rising by 20%.

Conversely, a bear market goes down by 20%. Also, macroeconomics plays a big role in whether a market is bullish or bearish. This is because the state of the economy as a whole drives the markets.

Also worthy of mention are corrections and reversals.

Stock Market Conditions

You can see that the S&P Futures chart has been in an uptrend for quite some time. There are market corrections that occur, even in an uptrend. Those corrections help to keep market equilibrium. Check out our online trading courses to learn how to trade different market conditions.


A correction is also called a “retracement.” When a market trends, occasionally it pulls back for a little while. Then the market returns to moving again in the direction of the trend.

This phenomenon is a correction. You don’t need to be afraid of corrections. They’re necessary in a trending market. It keeps markets and stock prices manageable.

If you’re worried about market conditions, then come chat with us in our live trade room. We have live streams every day.


A reversal occurs when the market direction changes completely and heads the opposite way. If you’re not prepared for those market conditions, it can be scary.

We have a list of penny stocks if you’re looking for trade ideas when the market is reversing. In fact, our watch lists are great no matter what the market is doing.

How Does Market Conditions Affect Cost and Demand?

  • Do you know how does market conditions affect cost and demand? Supply and demand moves markets. If there’s supply and not enough demand, prices fall. If there’s demand and not enough supply, prices rise.

Market Condition Analysis

Indices are leading economic indicators that assist traders in speculating. Many traders will check the indices to see if the market is moving in the same direction as the instrument they seek to trade.

Options are a great way to make money no matter what market conditions are. In fact, our stock alerts have entries and exits for options trades that we’re taking.

Also, keeping up with the news is another way that traders gauge what the market may do.

Market Indices

An index represents a section of the market. Specifically, it’s a portfolio of holdings that enables traders to gauge market performance.

An index is usually weighted either by market cap or price. The most popular indices used to track market movements are the S&P 500, Dow Jones, and NASDAQ. They serve as benchmarks, providing an excellent representation of the stock market.

Plenty of indices exist for a variety of markets. And they help traders work with a larger-picture perspective. Before entering into a trade, it’s good to have an idea of how the overall market is moving.


Experienced traders keep on top of the news. They want to know about reports, announcements, and meetings; as soon as they occur.

Anything that affects the markets from earnings reports to speeches from the Federal Reserve Chairman provides important information for traders.

For example, if OPEC meets, then traders of many stripes gather around waiting to hear the results. The OPEC meeting may very well affect the price of oil.

Yet does this only affect oil traders? No. Oil is primarily traded in US Dollars. Therefore, FOREX traders’ ears perk up as well, because the price of oil affects the US Dollar.

Then enter the gold traders. They also pay attention. Why? Because the price of oil affects the US Dollar which affects the price of gold.

It’s all interconnected. Like ripples created from throwing a stone into a pond, what happens in one market affects other markets. Due to this interconnectedness, experienced traders learn to view the wider picture.

Of course, you want to look closely at any particular instrument you consider trading. However, while close-ups are nice as well as necessary, so is zooming out and taking in the panoramic view. Otherwise, you can’t see the full picture.

Other methods of analysis include:

  • Fundamental Analysis – Using fundamental data, like metrics and ratios.
  • Technical Analysis – Using technical data, like price movement, patterns, and technical indicators.
  • End-of-Day Analysis – Looking at post-market data, like unusual volume and big winners and losers.
  • Sentiment Analysis – Using social media or joining trading communities to gauge pessimism or optimism.

Final Thoughts

There are many sources for further understanding of market conditions. It’s easy to just Google market conditions pdf to get someone’s view of the market. But you need to learn these factors for yourself.

And while there were a lot of factors that we covered, they’re not hard to understand. Because after a few weeks of reading current conditions, you’ll pick up a lot.

You’ll notice that you understand both macro and micro news reports, and those will give you another layer of knowledge. Each layer will help you learn more and more, until you start being able to look at one part of the market; and predict its effect on another.

An easy example is ‘market conditions real estate. Google that phrase, and you’ll see the real estate market. Housing starts being up – or down – effects timber, jobs, household debt, banks, etc, etc.

So even if you are not invested in the real estate market, you need to know how that market will impact your trades.

While this may seem like a huge learning curve, it’s actually not. Especially if you have a trail to follow. This way you don’t need to figure out your own trail; saving you time and money.

Join Bullish Bears stock trading service today to jump on the right trail, and find others on the same path as you are on.

Not being alone on the trail can be the difference between blowing your account or earning a living full time and enjoying the respect of your family. Join us today, we’re right here for you!

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