Ch 17 | The Biggest & Baby Bears

Let’s get into the Chapter 17 glossary. This chapter walks through several different historical bear markets and how the strategy handled them. Here are the key terms and concepts:

The Almost Bear (2018): A market drop that slipped below the 20% bear threshold for just a single half-day trading session on Christmas Eve. Because of the strategy’s strict rule to stay out of the market during the low-volume Christmas/New Year period, no trade was entered.

Bear Guilt: The uncomfortable, nagging feeling some traders get when they first profit during a falling market while everyone else is losing money. The author stresses that you should let this go – your trading does not cause the storm, and purposely drowning in it with everyone else helps no one.

Bear Threshold: The exact point when the SPY officially closes 20% below its most recent high, marking the true start of a bear market.

The Biden Bear (2022–2023): A slow, grinding, and deeply frustrating bear market. It constantly hovered and oscillated around the bear threshold without building any real downward momentum, making it an unrewarding, “sticky” mess to trade.

Bull Trap: A sharp, deceptive market rebound right in the middle of a bear market. The strategy’s exit rules are designed to trigger quickly during these traps so you can step out with only minor damage or a small profit.

The Covid Bear (2020): A “baby bear” that was incredibly fast, deep, and violent, dropping 34% in just 33 days due to unprecedented global pandemic shutdowns. Because it moved so rapidly, it didn’t give the strategy enough time to properly position for spectacular profits, resulting in a modest 5.2% gain.

The Great Financial Crisis (GFC) / The Biggest Bear (2007–2009): A chaotic, terrifying global collapse sparked by reckless leverage, subprime lending, and the failure of Lehman Brothers. The S&P 500 plunged 57%, providing the perfect sustained momentum for the ITMB strategy to thrive, ultimately more than doubling the starting account balance.