I argue that one can look at the stock market sell-off through the lens of this 5 stages of the grief process and try to identify which stage the market is in. A sell-off doesn't end until market participants go through these 5 stages of grief, after which, a new bull market can begin.

Over the past 2 months, the S&P has entered correction territory, down more than 10% from its all-time high. Almost all stocks have been in the carnage of selling that doesn't seem to stop. 

• Denial: you deny that your stock is going down. You try to buy at lower prices, thinking it's just one of the small corrections, everything is fine.

• Anger: you become frustrated and irritated at the "idiots" who sell your favorite stock.

• Bargain: you begin to wish you had sold your stock at higher prices. 

• Depression: you avoid the stock market, feel helpless, and tell everyone that you hate the stock market.

• Acceptance: you move on. You either find new stocks, or give up investing altogether.

Not until market participants finish the grief process do you enter a new bull market. This is consistent with what Warren Buffet has said, to be greedy when others are fearful. If you look at past events that drove the market down, we usually bottom right in the middle of the crisis. For example, when the Covid scare started in March 2020, the market actually bottomed at the end of March and never looked back.

I don't think we're at depression yet. If you look at the CNN Fear & Greed Index, we are only at "Fear." We want to see this index to go to "Extreme Fear" before we can turn bullish. To see the depression and acceptance phases play out, we need to see capitulation days, when the whole market just cannot take it anymore and sold everything. Right now we still see some groups acting stronger than others (for example, the energy stocks are still very strong, and healthcare stocks have been acting well). Those groups need to give up the strength, take a nose-dive, before we see any sort of bottom for the overall market.