Why the usual definition is only useful in hindsight
The conventional way to date the end of a bear market is to find the lowest close and measure the rise from it. That works perfectly in a history book and not at all in real time, because the low is only identifiable once something higher has followed it.
Every bear regime contains rallies that looked, while they were running, exactly like the beginning of a recovery. Depth-based definitions cannot separate those from the real thing.
What actually changes when a bear regime ends
A genuine regime recovery is a change in conditions, and those conditions are observable as they turn.
- Breadth broadens — advances spread across sectors instead of concentrating in a few names.
- Credit repairs — spreads tighten and stop leading equities lower.
- Volatility normalises — the term structure returns to its ordinary shape and stays there.
- Selling becomes selective — correlations fall and dispersion returns.
- Bad news stops working — negative headlines produce smaller and shorter declines.
Why bear market rallies fool people
Sharp rallies are a characteristic feature of bear regimes, not evidence against them. They are typically narrow, driven by positioning rather than participation, and they fade when the underlying conditions reassert themselves.
The distinguishing question is not how large the rally is but how broad it is and what happens in credit and volatility while it runs.
How regime analysis treats a recovery
In regime terms, recovery is its own state with its own conditions, not simply the absence of a bear regime. Classifying it is the same exercise as classifying any other regime: read market structure, and judge the transition on what was knowable at the time.
RegimeSignal™ treats regime recovery as a distinct classification for that reason, and reports how it behaves per regime rather than blending every state into a single figure.
Frequently asked
How do you know when a bear market is over?
When the conditions that defined it reverse — breadth broadens across sectors, credit spreads tighten, volatility term structure normalises and declines on bad news become shorter and shallower.
Is a bear market over once the index rises from its low?
Not reliably. The low can only be identified after the fact, and bear regimes routinely contain sharp rallies that fade. Structure is a more durable test than distance from the low.
What is a bear market rally?
A sharp advance inside an ongoing bear regime. It is typically narrow and positioning-driven, and it takes place while credit and volatility conditions remain stressed.
What is a regime recovery?
A distinct market state in which the conditions that defined the bear regime have reversed — broadening participation, easing credit stress and normalising volatility — rather than simply a rise off a low.