{"id":215909,"date":"2026-07-21T13:35:00","date_gmt":"2026-07-21T17:35:00","guid":{"rendered":"https:\/\/ibkrcampus.eu\/campus\/uncategorized\/when-is-a-bear-market-not-a-bear-market\/"},"modified":"2026-07-22T09:39:03","modified_gmt":"2026-07-22T09:39:03","slug":"when-is-a-bear-market-not-a-bear-market","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.eu\/campus\/traders-insight\/ibkr-market-insights\/when-is-a-bear-market-not-a-bear-market\/","title":{"rendered":"When is a \u201cBear Market\u201d Not a Bear Market?"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">There was a fair amount of <a href=\"https:\/\/www.msn.com\/en-us\/money\/markets\/chip-stocks-have-entered-a-bear-market-a-bofa-analyst-says-not-to-panic\/ar-AA289nXu?ocid=BingNewsVerp\">recent commentary<\/a> about the Philadelphia Semiconductor Index (SOX) entering bear market territory after pulling back 20% from its June 22<sup>nd<\/sup> high.&nbsp; Personally, I have a significant problem with the mechanical construct of -10% and -20% declines signifying a correction and a bear market, respectively.&nbsp; Those numbers make sense when discussing broad market moves but have much less relevance for narrow-based measures.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;Let\u2019s start with a visual.&nbsp; Does this look like a bear market to you?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em>SOX, 6-Months, Daily Candles with 10-day (red), 30-day (blue), 50-day (yellow), and 100-day (green) Moving Averages<\/em><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"697\" data-src=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2026\/07\/image-56-1100x697.png\" alt=\"SOX, 6-Months, Daily Candles with 10-day (red), 30-day (blue), 50-day (yellow), and 100-day (green) Moving Averages\" class=\"wp-image-215911 lazyload\" data-srcset=\"https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2026\/07\/image-56-1100x697.png 1100w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2026\/07\/image-56-700x444.png 700w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2026\/07\/image-56-300x190.png 300w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2026\/07\/image-56-768x487.png 768w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2026\/07\/image-56-1536x973.png 1536w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2026\/07\/image-56-2048x1298.png 2048w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/697;\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><em>Source: Interactive Brokers, past performance is not indicative of future returns.<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Might one credibly argue that this looks like a topping pattern or be concerned that shorter-term moving averages have turned lower?&nbsp; Certainly.&nbsp; But we still see longer-term moving averages pointing higher, and that upward sloping 100-day moving average remains about 15% below the current index level.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">More importantly, can an index that remains more than 70% up in just over 3 months be considered a bear market even if it pulls back 20% from its highs?&nbsp; I contend that it is hardly appropriate.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A bear market is more a state of mind than an arbitrary mathematical cutoff.&nbsp; Bear markets are accompanied by a feeling of existential dread, or a sense that little good can come from investing, and in a true bear market, those feelings persist for an extended period.&nbsp; One of my early bosses said to me that a good day in a bear market is when we close off our lows.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Quite frankly, the vast majority of younger and newer investors have never experienced a true, prolonged bear market.&nbsp; Indeed, we had significant pullbacks during 2022 and 2018 (the last two midterm election years), but they were measured in months, not years.&nbsp; The Covid bear market was the result of existential dread, but it was short-lived, thanks to massive fiscal and monetary stimulus.&nbsp; The last true bear markets were in the 2007-2009 (Global Financial Crisis) and the 2000-2002 (Internet Bubble) periods.&nbsp; Frankly speaking, if you are a US investor and weren\u2019t in the markets during those events, you have not experienced a bear market.&nbsp; They used to happen with some regularity, but we have been blessed with expansionary financial conditions, a deft Federal Reserve, and investor psychology that have kept long bear markets at bay.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As for the 20% definition: we need to take into account the normal volatility of a market before arbitrarily declaring whether it\u2019s in a bear (or bull) phase.&nbsp; Note that the historical volatility of a semiconductor proxy (SMH, since SOX does not have listed options) is much higher than that of the S&amp;P 500 (SPX).&nbsp; On a long-term basis (200 days), SMH\u2019s volatility is more than 3x higher than SPX, and in recent weeks it has been about 4x higher.&nbsp; If 20% is rightly considered extreme for SPX, it is hardly as noteworthy for semiconductor stocks.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em>SMH, 6-Month Chart: 30-Day (orange) and 200-day (blue) Historical Volatilities, with Implied Volatility (white)<\/em><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"599\" data-src=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2026\/07\/image-57-1100x599.png\" alt=\"SMH, 6-Month Chart: 30-Day (orange) and 200-day (blue) Historical Volatilities, with Implied Volatility (white)\" class=\"wp-image-215910 lazyload\" data-srcset=\"https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2026\/07\/image-57-1100x599.png 1100w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2026\/07\/image-57-700x381.png 700w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2026\/07\/image-57-300x163.png 300w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2026\/07\/image-57-768x418.png 768w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2026\/07\/image-57.png 1454w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/599;\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><em>Source: Interactive Brokers, past performance is not indicative of future returns.<\/em><br><strong><em>SPX, 6-Month Chart: 30-Day (orange) and 200-day (blue) Historical Volatilities, with Implied Volatility (white<\/em><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"601\" data-src=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2026\/07\/image-58-1100x601.png\" alt=\"SPX, 6-Month Chart: 30-Day (orange) and 200-day (blue) Historical Volatilities, with Implied Volatility (white\" class=\"wp-image-215912 lazyload\" data-srcset=\"https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2026\/07\/image-58-1100x601.png 1100w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2026\/07\/image-58-700x383.png 700w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2026\/07\/image-58-300x164.png 300w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2026\/07\/image-58-768x420.png 768w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2026\/07\/image-58.png 1454w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/601;\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><em>Source: Interactive Brokers, past performance is not indicative of future returns.<\/em><br>While I\u2019m highly dismissive of calling the recent drop in SOX a bear market, today\u2019s bounce is certainly welcomed by those who are long semiconductor shares.\u00a0 As of now, we are only back to the index\u2019s 10-day moving average, though, meaning that it is too early to call this a definitive turnaround.\u00a0 But remember, since bear market rallies tend to be short, sharp, and ferocious, maybe those who are trading from the long side should hope for that characterization for a few days.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>There was a fair amount of recent commentary about the Philadelphia Semiconductor Index (SOX) entering bear market territory after pulling back 20% from its June 22nd high.\u00a0 Personally, I have a significant problem with the mechanical construct of -10% and -20% declines signifying a correction and a bear market, respectively.\u00a0 Those numbers make sense when discussing broad market moves but have much less relevance for narrow-based measures.<\/p>\n","protected":false},"author":4,"featured_media":9198,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[145,147,8,12,153,148,7],"tags":[],"contributors-categories":[149],"class_list":["post-215909","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ibkr-market-insights","category-north-america","category-region","category-securities","category-stocks","category-text-articles","category-traders-insight","contributors-categories-interactive-brokers"],"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v28.0) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>When is a \u201cBear Market\u201d Not a Bear Market?<\/title>\n<meta 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