Basics Intermediate: Understanding Bull and Bear Markets

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1.
If you believe in "buying low and selling high," at which of the following points should you sell your stock?
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When the stock begins to move downward. This signals that the bull market may be reversing, although it is never certain. This signal is not present during the other situations mentioned, because they may just be periods of slow growth.
2.
What does the advance-decline line use to forecast market trends?
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A net advance. This figure measures the difference between the number of stocks advancing in price and the number declining in price.
3.
Bull market investors seek _______ more than anything.
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Growth. Bull markets are about rising prices, and rising prices are what growth is about. Therefore, income and dividends are secondary.
4.
Selling short involves _______.
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Selling when prices are high and buying when prices fall. This is the reverse of the buy low, sell high strategy. It attempts to take advantage of falling prices.
5.
Emotions can contribute to bull and bear markets.
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True. Aspects of investor psychology, such as emotions, can drive people to value stocks very high or very low.