How to tell if bear or bull market?

To officially classify a market as bearish, a specific threshold must be breached. Specifically, the closing price of the index must plummet by at least 20% from its most recent peak. This steep decline serves as a clear indicator of a significant shift in market dynamics.

Conversely, a more modest decline in the market, ranging from 10% to 19.9%, is categorized as a correction. While still indicative of a downturn, it does not carry the same level of significance as a full-fledged bear market.

As the market navigates through its cycles, a new bull market emerges as a beacon of hope. This upswing commences when the closing price of the index surpasses its previous low by a noteworthy 20%. This resurgence signals a return of positive sentiment and potential for growth.

Market cycles are inherently cyclical, with distinct peaks and troughs defining their boundaries. A pivotal moment in these cycles occurs when a stock index transitions into bear territory, a signal that market sentiment has shifted negatively.

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