Bearish

Bearish describes a negative or pessimistic outlook on prices or markets. In finance, a bearish investor expects prices to decline and may adopt strategies that profit from falling prices, such as selling assets or buying put options. A bearish trend is a prolonged price decrease, typically defined as a market drop of 20% from a recent high (bear market). The opposite is bullish. The term originates from the way a bear attacks: swiping its paw downward, which conveys downward movement, as opposed to a bull that pushes upward with its horns. The metaphor contrasts with bullish, which implies rising prices and confidence.

Bearish sentiment can be driven by macroeconomic data, earnings disappointments, geopolitical risk, rising interest rates or inflation, and can be reflected in indicators such as price momentum, moving averages crossing downward, or put-call ratios. Market participants may declare themselves bearish after a series of lower highs and lower lows.

In practice, bearish strategies include short selling, using inverse exchange-traded funds, or hedging with options. Critics argue that excessive bearishness can become self-fulfilling, contributing to further price declines. The term is also used in broader contexts to describe negative outlooks on assets, sectors, or markets, not just equities, and can apply to currencies or commodities.

Bearish vs. bearishness vs. bear market clarifications: bearish describes sentiment or expectations, bearishness as a noun for the attitude, and bear market as the price decline phase.