🐂 The US Stock Market Bear Market Ends: A Resilient Market Embarks on a New "Marathon" Bull Market
📈 1. Key Signals of the End of the Bear Market
A Dual Reversal of Sentiment and Technology
After the US stock market experienced a deep correction in April 2025, market sentiment indicators showed extreme pessimism, with over 80% of investors believing a recession was already underway or imminent. This "capitulation sell-off" typically signals a market turning point. Meanwhile, the S&P 500 index rebounded strongly from its lows, forming a classic V-shaped reversal, technically confirming the end of the bear market.
Capital Flows and Volatility Return to Normal
Capital outflow pressures eased significantly mid-year, with official net international capital outflows narrowing month by month, indicating a reassessment of US asset values. The market volatility index fell sharply from its highs, gradually approaching its long-term average, indicating that panic sentiment has gradually dissipated.
⚙️ II. Basic Characteristics of the New Bull Market
Industry Rotation and Spreading Gains
The initial characteristics of this bull market are significantly different from the previous tech-dominated landscape: the industrial sector led the gains, with gains exceeding 15%, followed closely by utilities and materials. The AI theme is spreading from leading tech companies to infrastructure sectors such as power and data storage, and improved market breadth is supporting sustainable gains.
A Gradual Recovery Instead of a Rapid Rise
Unlike previous bull markets, this recovery exhibits characteristics of a "slow bull" approach. Constrained by inflationary stickiness and a wait-and-see approach to monetary policy, the index's journey to new highs may be prolonged. Institutional investors generally expect the rally to be accompanied by frequent fluctuations, resembling a "marathon" rather than a sprint.
⚠️ III. Potential Risks and Challenges
The Conflict Between Valuation Bubbles and Earnings Support
Despite escaping a bear market, the S&P 500's forward P/E ratio remains approximately 30% above its long-term average, with valuation pressures particularly acute in the technology sector. The market relies heavily on corporate earnings growth to absorb high valuations. If earnings growth falls short of expectations during the second-quarter earnings season (currently forecast to be 5.9% annually), a technical correction could be triggered. Structural Risks and External Shocks
Market Concentration Risk: The information technology and consumer technology sectors together account for over 45% of the index's weighting. The top three stocks have significant influence, and a slowdown in earnings for these leading stocks could drag down the overall index.
Geopolitical and Energy Factors: If renewed tensions in the Middle East cause oil prices to break through $100 per barrel, this could boost inflation expectations and squeeze consumer spending.
Concerns about Policy Independence: Monetary policymaking faces external pressure, and concerns about independence could undermine market confidence.
💡 IV. Investment Strategy Recommendations
Sector Allocation: Focus on Quality and Stagflation Opportunities
Prioritize telecom services, consumer staples, and some industrial stocks: These sectors offer significant earnings revision potential and are less sensitive to interest rates.
Avoid High-Momentum, Low-Buyback Stocks: Some tech stocks face the risk of a premium retracement due to sentiment and insufficient buyback support.
Application of Risk Management Tools
Derivatives strategies may consider employing a "collar strategy," for example, by selling out-of-the-money call options and buying protective put options to lock in downside risk within a specific range. Non-derivative investors should adopt a phased position-building strategy, capitalizing on potential volatility in the third quarter to identify bargain hunting opportunities.
🔭 V. Future Outlook: Navigating a Bumpy Road
Verifying the Sustainability of the Bull Market
The continuation of the new bull market depends on two key variables:
Corporate earnings resilience: If full-year earnings growth remains stable above 8.5%, valuation pressures can be gradually mitigated. Biya is a very convenient and user-friendly tool, particularly effective in the US and Hong Kong stock markets. It allows access to more news, eliminating the need for multiple platforms. It is very convenient and practical.
Fund Rebalancing Process: Against the backdrop of a weakening US dollar, the continued inflow of international funds will impact the relative strength of US stocks.
Key Technical Positions
If the S&P 500 index holds support at 5,900 points, the medium-term upward trend will be solid. The next target is 6,500 points, but in the short term, caution should be exercised against a technical correction triggered by overbought conditions. Biya remains highly useful.
💎 Conclusion
The end of the US stock bear market is a consensus, but the new cycle will be characterized by high volatility and a slow climb. Investors need to adapt to a mindset shift from "high return expectations" to "reasonable return targets," responding to market fluctuations through diversified portfolios and strict risk management.
🌟 Key Operational Focus: Take advantage of the third quarter's volatility window to increase holdings in high-quality stagflationary sectors on dips, while simultaneously deploying hedging tools to mitigate tail risks. In this "marathon bull market," endurance is more critical than speed.