The first phase appears to be just a correction. Most people are still bullish and are willing to buy at lower levels. After an initial correction markets rise again. But somehow they fail to cross the previous highs. News flow slowly turns negative. Bulls now start getting nervous. Another phase of selling begins.
The second phase starts. Buyers keep vanishing as news flow grows worse and earnings disappoint. More and more of investors want to sell and prices keep falling. Every rise is short lived and selling comes again.
The final phase is of total panic (Remember Post Sept 11 Selling). Many times triggered by some event. People get totally frustrated with stocks and sell at what ever price they get. All are scared to buy. “Stock Market” becomes the most hated word.
In midst of all doom and gloom another bull market starts and the cycles continue.