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Bear Market Behaviour/Psychological Phases:
1 Recognition:
At the beginning of this phase, mostly high sentiments and positive investing behaviour.
Investors ignore the initial onset of a bear market and mistake it for ordinary fluctuations.
But by the end of this phase, a few participants will recognize that a bear market is impending and they will start selling as well, often these are intelligent and foreign investors.
2 Panic:
Prices tend to fall sharply.
Trading volume tends to drop.
investor sentiment will drop significantly.
3 Stabilization:
Panic selling begins to contract.
Investors start digesting the reason for the price decline
This phase can be volatile and will last the longest of all phases.
Speculators will begin a reversal.
4. Anticipation:
prices begin levelling off and finding a bottom.
Low valuations and/or good news start attracting more investors into purchasing securities.
