What trend indicates low sentiments in a bear market?

In a bear market, a declining trend in corporate earnings is a strong indicator of low investor sentiment. This is because when companies report lower earnings, it often leads to a negative outlook on their future performance. Such sentiment can discourage investors, prompting them to sell off stocks, which further drives down prices. In this environment, fear and pessimism dominate the market, and the declining earnings signals to investors that the economic conditions are worsening, heightening their concerns about the viability of investments in the stock market.

While high volume can suggest strong selling pressure, it does not specifically denote low sentiment since high trading volume can occur in various market conditions. Similarly, rising interest rates may reflect economic strength but can also occur in a bear market depending on the context, and increasing commodity prices may indicate inflationary pressures rather than directly correlating with investor sentiment. Therefore, the trend of declining corporate earnings distinctly reflects the low sentiment characteristic of a bear market.