Identifying bear market bottoms and the emergence of new bull markets is one of the most consequential — and most difficult — challenges in investment management. Being positioned early in a new bull market produces outsized returns, while remaining positioned late in a bear market produces devastating losses. Systematic approaches to this identification problem, grounded in price action and breadth analysis rather than economic forecasting, offer a more reliable method than relying on fundamental predictions alone.

The 90% Day Phenomenon

Technical research has documented a powerful pattern at bear market bottoms: “90% days” — sessions in which 90% or more of NYSE volume is on the advancing side (upside volume) and 90% or more of issues traded advance rather than decline. After a severe decline, one or more 90% upside days often signal that selling pressure has been exhausted and a sustained recovery is beginning. The historical research by Paul Desmond and Lowry Research documented that major market bottoms have been consistently preceded by 90% downside selling days followed by 90% upside buying days.

Follow-Through Days

William O’Neil identified the “follow-through day” as a confirmation signal for new bull markets. After a market has corrected and attempted to rally, a follow-through day occurs when a major index rallies 1.7% or more on heavier volume than the previous day, typically on the 4th to 7th day of an attempted rally. Not all follow-throughs succeed — some lead to brief recoveries that fail — but historically, major bull markets have almost always been preceded by a confirmed follow-through day. Waiting for this confirmation reduces the risk of buying too early in a bear market that continues lower.

Breadth Confirmation

A new bull market’s authenticity is confirmed by expanding breadth: rising participation across many stocks, sectors, and industries — not just a handful of mega-caps. When the advance-decline line rises alongside the major indices, confirming broad participation, the bull market signal is strengthened. When indices rise but breadth fails to confirm, the rally may be narrow and fragile — more likely to fail than to be the beginning of a sustained trend.

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