This is a term that is not strictly defined although everyone agrees that a Bear market is a DECLINING stock market.

Some people say that a 15% overall decline in a stock market index like the Dow 30 or the S&P 500 or the NASDAQ constitutes a Bear Market.

Others say that a decline needs to reach 20% to be a Bear market. If that’s the case, then the Russell 2000 which is an average of smaller sized stocks, just entered Bear market territory.

On July 6th, the index slipped 20.5% below it’s recent high from April. That is a bear market by almost anyone’s definition.

Why is this important if only small stocks are falling hard? It is important because the small stocks tend to lead the market and the medium to big stocks soon follow.

You can follow the Russell 2000 index by typing ^RUT into most online financial sites. However, you can’t buy this ticker symbol, it’s just an index. If you want to invest in the Russell 2000, you can buy the iShares Exchange Traded Fund which mimics the index. It’s ticker symbol is IWM.

Below is a chart for IWM:

For more information about how to take advantage and profit from Bear markets, read our Investing 101 eBook.