Bear markets are going to have four set phases and you should be familiar with them. Number one is the optimism that transforms into pessimism phase. This is where investors start to feel more and more negative about the future of markets #2. There's usually a sudden stock drop as pessimism and fear takeover. Investors will generally function in a herd mentality, triggering a quick and large sell off to gap downwards.
#3 the period of speculation. This is when stocks have dropped enough speculators and traders hoping to cash in, swoop in and drive up prices of select stocks. Increasing volatility in the markets. #4 the final phase is the slow fade. The final segment is when the rate of sell off slows, eventually declining to flat. And this is when a bottom is put into the market. And after this point stocks begin trading upwards as a trend, establishing the beginning of the next bull market.
One important thing to note about bear markets is that they're not the same as corrections. Corrections are short term trends over a few months, often referred to as cooling off from an overheated bull market run. Corrections occur during bull markets. Bear markets on the other hand, are completely the opposite of a bull market, and they're longer term events and trends that take time to be established.
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