At what percentage decline does a bear market begin?

FINRA and Investor.gov give a drop of about 20% or more in a broad index as the yardstick; Investor.gov adds that it happens over at least a two-month period.

Why is the 200-day average watched?

According to StockCharts ChartSchool, the 200-day average is a widely used reference for the long-term trend and is often cited as a support or resistance level.

Bull vs Bear Market: The 20% Rule and Corrections

In short: A bear market is a decline period usually defined as a broad index falling about 20% or more; a pullback of roughly 10% is a correction. FINRA gives no numeric threshold for a bull market.

Last updated: 2026-10-22

What is a bear market?

A bear market is a period of falling prices and pessimistic sentiment. The Investor.gov glossary says it generally occurs when a broad market index falls 20% or more over at least a two-month period^[1]. FINRA likewise gives a drop of about 20% in a broad index as the yardstick^[2].

What is a bull market?

A bull market is a period of marked, sustained price gains. FINRA defines the term as the opposite of a bear market, a large rise in prices, and gives no numeric threshold for it^[2]. Some analysts apply the 20% logic to rallies as well, but that is a convention that grew out of usage, not an official definition.

Correction vs bear market

According to FINRA, a correction is a reversal of at least 10% before prices resume their earlier trend; the term can technically describe a rise or a fall but is mostly used for a drop^[2]. In common usage a decline of roughly 10% is a correction and a decline of 20% or more is a bear market.

Reading direction with moving averages

Many investors read the trend against the 50- and 200-day moving averages. According to StockCharts ChartSchool, the 50-day average is a popular reference for the medium-term trend and the 200-day for the long-term trend, and the two are often used together^[3]. Price above both is read as an uptrend and below both as a downtrend; in between, the phase may be called a 'correction' or 'recovery'.

Markets are not always in the same phase

Equities, crypto assets, oil, gold and currencies can be in different phases at the same time; one may be in a long-term uptrend while another is in a downtrend. Asking 'is the market bullish or bearish?' per asset class gives a more accurate picture than a single answer.

Limits

Definitions are not exact: the yardstick (index, duration, percentage) varies by source. Moving averages are based on past prices and lag. This page is educational, not investment advice.

Frequently asked questions

At what percentage decline does a bear market begin?: FINRA and Investor.gov give a drop of about 20% or more in a broad index as the yardstick; Investor.gov adds that it happens over at least a two-month period^[1]^[2].
Is there a percentage threshold for a bull market?: FINRA defines a bull market as the opposite of a bear market, a large rise in prices, and gives no numeric threshold; percentages in use are conventions^[2].
What is a correction?: According to FINRA, a correction is a reversal of at least 10% before prices resume their earlier trend^[2].
Why is the 200-day average watched?: According to StockCharts ChartSchool, the 200-day average is a widely used reference for the long-term trend and is often cited as a support or resistance level^[3].

Related guides

Sources

Bear Market (Glossary). Investor.gov (U.S. SEC Office of Investor Education and Advocacy). Accessed: 2026-10-22.
Key Terms for Tough Times: The Vocabulary of Stressed Markets. FINRA, 2025. Accessed: 2026-10-22.
Moving Averages - Simple and Exponential. StockCharts ChartSchool. Accessed: 2026-10-22.

Source links were compared with the page content before publication; principles: Editorial Principles