With the S&P 500 now in a bear market, despair and capitulation are the next stages of investors' grief

The S&P 500 SPX, -3.88% officially entered a bear market on June 13, down more than 20% from its January 2022 high. While there’s no way of knowing how much further stocks will fall until their final bottom, odds are good that when that happens you won’t the feel much worse about the stock market’s prospects than you do already.

A good illustration comes from three different sentiment surveys during the 2007-2009 bear market. When that bear market first broached the 20% loss threshold in July 2008, market sentiment was nearly as pessimistic as it was at the final bottom in March 2009, when the S&P 500 was 57% lower than where it stood at its October 2007 bull market high. Here are the specifics:

The hallmark of a bear-market bottom is that the initially rally off the low is not trusted, considered nothing more than a bear-market trap. In contrast, the hallmark of a bear-market rally is the eagerness to believe that happy days are here again.

MktwHulbert Nothing stops or slows down the increase in the price of oil, gas, food; so inflation will remain high. To fight inflation, Fed will raise interest rate as much as the increase in inflation. High interest rates reduce earnings; hence, kill stocks, create Bear Market & recession.

MktwHulbert Markets dropped as investors worried inflation will cause Fed to raise interest rate triggering recession. 8.6% inflation is record high so Fed will raise rates during next 7 months to bring inflation down to 2%. Stock market continues to crash & burn next 7 months then recession

MktwHulbert Man is on something

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