What is a market correction?
A correction is a drawdown that reprices an extended market without breaking its structure. Breadth thins temporarily, volatility spikes and then decays, credit conditions stay orderly, and buyers return before the trend is damaged.
Corrections are frequent and largely unpredictable in their timing. They are also, structurally, the least informative kind of decline — most of them tell you nothing about the state of the cycle.
What is a bear market?
A bear regime is a sustained change in the market's operating conditions. Leadership narrows and then breaks, credit spreads widen and stay wide, volatility persists rather than decaying, and rallies fail where they previously held.
This is why a bear regime cannot be identified from the size of a drawdown alone. Depth is a result; the regime is the cause.
Why the percentage definitions mislead
The conventional thresholds — a correction here, a bear market there — are descriptive labels applied after the fact. They tell you what already happened to price, and they arrive far too late to be decision-useful.
A structural read asks a different question: are the conditions that support the uptrend still in place? That question is answerable while the drawdown is still shallow.
- Correction — trend intact, volatility spikes and decays, credit orderly, breadth recovers.
- Bear regime — trend broken, volatility persists, credit stressed, rallies fail.
- The difference is visible in structure before it is visible in depth.
How to tell them apart in real time
Watch what happens after the first sharp leg down. If breadth repairs, credit stays calm and volatility term structure normalises, the decline is behaving like a correction. If breadth keeps deteriorating on rallies and credit refuses to settle, the market is behaving like a developing bear regime.
RegimeSignal™ classifies that distinction explicitly rather than leaving it to be inferred from the drawdown, and publishes every dated call with its horizon and resolution.
Frequently asked
What is the difference between a correction and a bear market?
A correction is a sharp decline within an intact uptrend, where volatility decays and breadth repairs. A bear market is a change of regime, where credit, breadth and volatility conditions deteriorate and stay deteriorated.
Can a correction turn into a bear market?
Yes. Corrections and bear regimes often start identically. What separates them is whether market structure repairs after the first leg down or keeps breaking.
Are the percentage definitions of correction and bear market useful?
They are descriptive labels applied after the drawdown has already occurred, so they are of little use while a decline is developing. Structural conditions change before depth thresholds are crossed.
Does RegimeSignal tell subscribers to sell in a bear regime?
No. RegimeSignal™ is market research and intelligence. It classifies the market's state; allocation decisions remain with the subscriber or their advisor.