When the market is on a sustained downward trajectory, with little optimism from traders to bring about a rally, it is referred to as a bear market.
This is because those investors who hold a pessimistic view on the market are known as bears. In a bear market, bearish sentiment has taken hold and the continued downward momentum in price only gets worse as it fuels pessimism surrounding the market. When the opposite happens – and optimism abounds, driving the market higher – it is referred to as a
It’s a source of debate among analysts and investors about how sustained and dramatic a market fall has to be to be considered a bear market.
Bear markets are not the only conditions in which markets can fall in price. Corrections are shorter drops that tend to last less than two months, and market crashes are sudden drops in markets that can have devastating results.