🌟 Light at the End of the Bear Market: A Complete Analysis of US Stock Market Bottoming and Reversal Signals in the Second Half of 2025

🔍 1. Core Signals of the End of a Bear Market: Sentiment, Valuations, and Policy Shifts
Extreme Pessimism Has Bottomped Out
The Consumer Confidence Index has fallen to a two-year low, reflecting market sentiment entering a "fearful" zone. Historically, this often signals a market bottom.
Panic selling accompanied by increased trading volume (e.g., the three major stock indexes experienced their largest single-day declines of the year) suggests a concentrated release of short-selling forces, accumulating momentum for a rebound.
Valuations Return to Reasonable Ranges
The S&P 500 forward P/E ratio has retreated from its bubble peak, with tech stocks experiencing significant valuation contraction (e.g., Nvidia's P/E ratio has compressed from its peak). Valuation advantages in some defensive sectors (utilities and consumer staples) have become more pronounced.
Downward revisions to corporate earnings expectations are nearing completion. EPS for consumer discretionary products in Q2 2025 has stabilized after a 6% decline, indicating that the market has fully priced in a recession. Expectations of improved liquidity are rising.
The probability of a Federal Reserve rate cut has risen to over 90%. If economic data continues to weaken, the Fed may accelerate its easing pace and inject liquidity into the market.
Institutional funds are shifting from a cash-first approach to a phased approach. ETF flows indicate continued inflows into defensive sectors such as utilities and healthcare.

⚙️ II. Reversal Momentum: The Resonance of Technical and Funding Analysis
A technical bottoming pattern is emerging.
The S&P 500 has repeatedly tested key support levels (such as the 200-day moving average), forming a "double bottom" or "head and shoulders" pattern. A break above the neckline would confirm a trend reversal.
After a deep correction, the Nasdaq index's relative strength index (RSI) has entered oversold territory, indicating strong demand for a technical rebound.
Fund rotation and the return of major investors.
Selling pressure on tech stocks has eased: After the peak of the "Big Seven"'s single-day market capitalization decline, short positions have been gradually closed, and hedge fund selling has weakened. Funds are shifting from growth stocks to value stocks: Cyclical sectors such as industrials and materials are seeing inflows, reflecting growing market expectations for a soft landing.

🚀 III. Pioneer Sectors Leading the Reversal
Technology: AI Commercialization Drives Valuation Restructuring
Artificial intelligence is shifting from concepts to practical applications (such as autonomous driving and enterprise AI tools). Cloud business growth for giants like Microsoft and Google is rebounding, providing profit support.
Capital expenditure on semiconductor equipment is recovering, and TSMC's 2nm mass production progress is exceeding expectations, driving a recovery in the supply chain.
Consumer and Healthcare: Defensive Attributes Combined with Resilient Demand
Consumer Staples (XLP) are benefiting from declining inflation and wage growth, and leading fast-moving consumer goods companies maintain strong pricing power.
Healthcare (XLV) enjoys robust demand, and the advancement of innovative drug pipelines such as weight loss drugs and gene therapies provides a hedge against economic cycle fluctuations.

⚠️ IV. Potential Risks: The "Last Drop" on the Road to Reversal
Stagflation Concerns Have Not Been Completely Alleviated
If oil prices surge again or service inflation becomes more viscous than expected, the timing of the Fed's interest rate cut could be delayed, triggering a second market bottom. A corporate debt crisis looms.

In a high-interest environment, refinancing pressure on low-rated companies is surging, and localized default risks may erupt, impacting market confidence.

💎 V. Investment Strategy: Strategies for Offensive and Defensive Planning in the Post-Bear Market Era
Defensive Positioning Before the Inflection Point is Confirmed
Core Positions (60%): Focus on giants with stable cash flow (Microsoft, UnitedHealth) and high-dividend utility stocks.
Hedging Tools (20%): Allocate to long-term US Treasury ETFs, benefiting from both capital gains and safe-haven properties during a rate cut cycle.
Offensive Directions After the Rebound Initiates
Leading Tech Sectors: Semiconductor Equipment (TSMC), AI Software Service Providers.
Cyclical Reversal Sectors: Industrial Automation, Energy Transition Materials (Lithium, Copper).
Disciplined Trading Rhythm
Add to positions after a breakout above a key technical level (e.g., the S&P 500 exceeds 580). Set a stop-loss and wait and see if the index falls below the previous low. Biya is a very convenient and user-friendly tool, particularly effective in the US and Hong Kong stock markets. You can see more news, eliminating the need for multiple platforms. It's very convenient and practical.
Avoid chasing volatile assets like gold and crude oil. Quickly entering and exiting during policy-sensitive periods is extremely risky.

💎 Conclusion: There's light at the end of the tunnel; patiently wait for signals of resonance.
The US stock market bear market is ending, but a reversal requires three key signals:
Sentimental: The VIX fear index has fallen below 20, and retail investor holdings have dropped to a freezing point;
Policy: The Fed has implemented its rate cut and shifted its tone to "maintaining growth";
Technical: The S&P 500 has broken through its 200-day moving average with strong volume and held steady. Biya is still very useful.
Final tip: History shows that the end of a bear market is often accompanied by a "silent reversal in despair." For now, you need to endure the final wave of volatility, focus on investing in high-quality assets on the left side, and avoid emotional trading—you must be there when lightning strikes.