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Five Stages of a Bear Market Grief

Grief is universal. It may be the death of a loved one, the end of a relationship or divorce, a loss of a job, or other dramatic events that significantly impact a person.

The legendary and well-respected Swiss-American psychiatrist and pioneer in the studies of dying people, Elisabeth Kubler-Ross, published a book, “On Death and Dying,” in 1969.

The book outlined her theory of grief and the emotions or responses experienced by people who are grieving a loved one. According to the Kubler-Ross model, the five stages of grief are denial, anger, bargaining, depression, and acceptance.

The denial stage is associated with common traits such as avoidance, confusion, shock, and fear.

The anger stage is characterized by frustration, irritation, and anxiety.

The bargaining stage is the mid-point stage of the grief cycle and typically the shortest. The classic response is struggling to find meaning or clarification by reaching out to others or telling one’s story.

Depression is the deepest and longest of the five stages. The phase entails being overwhelmed, helplessness, hostility, and flight.

The final stage is the acceptance stage, where one explores options, establishes a new plan, and moves on.

It takes time to go through the grieving process. The five stages are not always sequential and easily defined since each person’s experience varies.

Bear-market psychology also follows a progression that resembles the five stages of grief. Applying the Kubler-Ross model to the bear market grief scenario, we may still be early in progressing through the five stages of a bear market grief.

In the later stages of a bull market, it is typical for investors to be overconfident. Fear of missing out or FOMO draws traders and investors into the market as greed overrides disciplined risk management investing.

Focusing only on performance over everything else causes investors and traders to concentrate or chase assets and securities that have been doing their best, leading to widespread speculative behaviors.

As a bear market sets in, the most recent market top level becomes an anchor. It is the target that every trader and investor needs to reach to sell. However, this level does not come as the primary downtrend leads to brutal and sharp selloffs. Toward the final phase of the bear decline, selling exhaustion or capitulation tends to develop. At this point, markets and securities typically fall far below fair value or equilibrium level.

The 4-month head and shoulders top and a potential double top or double bottom pattern indicates that the bear market decline that began in November 2021 (Nasdaq and growth markets) and January 2022 (Listed markets) be approaching the midpoint or the bargaining phase.

The good news is that half of the decline is behind us. The bad news is that the depression and acceptance phases need to occur to complete the bear market decline.

The two recent technical patterns, the head and shoulders top, and the double top/double bottom warn of an inflection point. The Jun 2022 low is pivotal support, and the impending test will decide the next phase.

The pivotal support for SPX Index is 3,636.87 (6/17/22), INDU is 29,653.29 (6/17/22), NYA is 13,993.20/13,988.86 (6/17 and 7/14/22), COMPQ is 10,565.13 (6/16/22), and NDX is 11,037.21 (6/16/22).

Violation of the mid-June 2022 lows confirms a head/shoulders top and a double bottom breakdown, suggesting the next market selloff, possibly leading to the depression and the acceptance phase.

On the other hand, a successful test of the June 2022 lows signals the next oversold rally and to another right shoulder or the confirmation of a double bottom pattern and a sharper oversold rally, possibly back to retest the Aug 2022 high.

Source: Chart courtesy of

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