When will the financial markets recover after this sharp decline?
"predicting the bottom" is the most difficult task in the world of finance.
When will the bleeding end? (Indicators and Scenarios) Historically, markets don't rise suddenly in a straight line, but rather go through phases. Here's what to watch now:
The "Absorption" Phase (Short Term): Current technical analysis of indices like the S&P 500 suggests we are looking for a stable "demand zone." The current decline is considered by some to be a "momentum release," and a real rise will only begin after the price stabilizes above key support levels (such as the 4,920 level in some global indices).
Interest Rate and Monetary Policy Factor: Markets in 2026 are very sensitive to the decisions of the US Federal Reserve and its leadership appointments. Forecasts indicate that any stabilization of bond yields (keeping the yield below 4.50%) will be the first green light for liquidity to return to stocks.
The AI Revolution: Despite the downturn, the AI Supercycle continues to support the profits of major companies. Analysts from J.P. Morgan and Goldman Sachs predict that 2026 could end with positive gains (up to 11%) despite the current sharp fluctuations, driven by real earnings growth, not just speculation.
How long does a recovery usually take?
If we consider this downturn a "sharp correction" or the start of a "bear market," here are the historical averages:
Normal corrections (10-20%): Typically take 4 to 6 months to return to previous highs.
Bear markets (over 20%): Can take 1 to 2 years for a full recovery, but the "upward bounce" often begins weeks before the bad news subsides.
Signs of an impending rebound (What to watch on your screen?)
A decline in the VIX (Voice Index): When this index starts to fall, it means that panic is beginning to dissipate.
Stability of "Leading Stocks": Look for stability in major tech stocks; they are the first to lead the recovery.
