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.

You may have heard a talking head say on TV that a rally in a stock, currency or commodity is just a “dead cat bounce” and wondered what they were talking about.

Today’s rally in global stock markets (Dow up 400 points as of this writing) is a perfect example of a dead-cat bounce. While the stock markets of the world are falling due to the European debt crisis, this is a relief rally which fools some investors into thinking that the 1,000 point fall in the Dow last Thursday was just an abberation, a black swan or some “fat-finger” mistake.

The expression comes from the idea that even a dead cat will bounce a little bit when thrown from a building. That’s a tough image to conjure if you’re a cat lover, but it explains the expression well. The underlying financial instrument (stock, bond, etc.) being bought and sold in the market may be going up, but the expression implies that it won’t last for long and will resume a downward path very soon.

Please note that although many investors will lose money from dead-cat bounces, no cats were harmed in the writing of this article or in making the photo above.