What is a bull market and a bear market?

The names are usually explained by how the animals attack: a bull thrusts its horns up, a bear swipes its paws down. In a bull market, prices rise over months or years with pullbacks along the way; in a bear market, they fall over months, with rallies along the way.

The ±20% convention in the drawing at the top of the page is measured on a broad index, usually on closing prices. Hypothetical: an index peaks at 1,000 points. A close at 800 or below, 20% down, marks a bear market. If it then bottoms at 760, a close at 912 or above, 20% up from that low, marks a new bull market.

The words are also used loosely for a single stock, a sector or crypto, and for a mood: bullish means expecting prices to rise, bearish expecting them to fall.

Bull market
A sustained rise in prices. By common convention, it starts once a broad index has risen 20% from its low.
Bear market
A sustained fall in prices. By common convention, a drop of 20% or more from the last high.
Correction
A fall of 10% to 20% from a recent high.
Bear market rally
A sharp rise inside a bear market that fails before a new high. Several can happen before the final low.

Correction vs bear market: what’s the difference?

A correction is a drop of 10% to 20% from a recent high; past 20%, the same convention calls it a bear market. Smaller dips are often called pullbacks, an informal term. The drawing below puts the bands side by side: one hypothetical path falls 13% and recovers, a correction; the other falls 27%, a bear market.

Many corrections end without becoming bear markets, but at −10% no one knows which kind it will be. The way back is also longer than the way down: from 1,000 to 800 is −20%, but getting from 800 back to 1,000 takes +25%. The risk management guide shows the same math for a trading account.

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Three hand-drawn horizontal bands measuring the fall from the last high: 0 to −10% labeled pullback (informal), −10% to −20% labeled correction, and below −20% labeled bear market. Two paths start from a peak: the first dips to −13% and recovers, the second falls to −27%; a note reads fall measured from the last high.

How long do bull and bear markets last?

There is no fixed length. In US market history, bull markets have generally lasted longer than bear markets, and declines have tended to be faster than advances, but the range is wide: some bear markets ended within weeks, others took years.

Two cautions. The dates are only fixed afterwards: a bear market is dated from the old peak once the 20% drop has happened, and its end from the low once the 20% rise has. And past averages do not tell you how long the current phase will last.

What changes between a bull and a bear market?

Beyond the direction of the index, several things tend to shift. The drawing below compares three of them:

  • Breadth: in a healthy bull market many stocks rise together; in a bear market most fall. An index held up by a handful of large stocks while most others slip is a warning sign many traders watch.
  • Volatility: daily swings are usually smaller in steady advances and larger in declines; the VIX tends to rise when stocks fall.
  • Leadership: growth and economically sensitive stocks often lead advances, while defensive sectors such as utilities and consumer staples often hold up better in declines (see stock market sectors).
  • Reaction to news: in bull markets bad news is often shrugged off; in bear markets good news often fails to lift prices for long.

Turn your phone sideways to read the drawing. Tap to close.

A hand-drawn comparison table with a bull market column and a bear market column. Breadth: eight of ten small arrows point up in the bull column, three of ten in the bear column. Volatility: a calm, gently rising squiggle against a wild, falling one. Leadership: growth and cyclical stocks often lead, against defensive sectors often hold up better.

Why is it so hard to time the switch?

Because each definition needs the move to happen first. When an index is 15% off its high, it could be a correction about to end or the start of a long decline. When it is 15% up from a low, it could be a new bull market or a bear market rally about to fail. The 20% marks confirm after the fact; they do not signal in advance.

Emotion makes it harder, as the curve below shows: news and sentiment are usually worst near lows and best near highs. Waiting to feel certain often means selling after much of a decline and buying back after much of a rise.

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A hand-drawn wave-shaped price curve with emotions written along it: optimism on the rise, euphoria at the top, anxiety at the first drop, then fear, panic at the bottom and hope in the recovery.

How do traders and investors adapt to bull and bear markets?

Most do not try to call the exact top or bottom. They follow the trend that is already visible and manage risk when it changes:

  • Read the trend on the index: higher highs and higher lows on a weekly chart describe a bull phase, lower highs and lower lows a bear phase. Market structure explains how to mark them.
  • Follow rather than predict: trend following adds exposure while the trend is up and cuts it when it turns, accepting late entries and exits.
  • Adjust size: in bear markets, when swings are wider, many traders trade smaller and hold fewer longs. The position size calculator keeps the dollar risk fixed.
  • Keep a plan: long-term investors often rely on diversification and regular buying, such as dollar-cost averaging, which do not depend on timing the cycle.
  • For intraday traders, UpTickFlow, our TradingView indicator, checks the higher-timeframe direction before each signal and draws a grey WAIT line when timeframes disagree. It does not predict bull or bear markets.