What Bear Market Rallies Look Like

Author: Jeff Pierce* Comments(4)
Excellent chart demonstrating how powerful rallies within bear markets can be. I calculated the average decline/rally, but excluded the last decline and rally as they were so dramatic and would skew the results.
Avg % decline = 40%
Avg % rally = 33%

Right now we’re roughly 18% off the lows on the Dow & Nasdaq. Bearish sentiment is definitely being relieved, and I can already hear people saying how with a new administration things are going to be different from here on out.

clipped from www.financialsense.com

On the way to the bottom, the market must relieve bearish sentiment (make you forget your fear). It can only do this through sharp powerful rallies (where we all laugh for a day with CNBC on how close we came to the brink). We have described these as “rocket-launched (oh they’ve saved us) bear market rallies.” Investors who cheer these sharp up moves as a sign of the bottom should take note of the chart provided by Tom Denham from Elliotwave.com below.

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4 Comments so far

  1. Tony Tovar on November 6th, 2008

    7200 is still target on the DOW, no bear in sight just yet. :D I think it will go deeper and the pain it will inflict too! Careful!

  2. Jeff Pierce on November 6th, 2008

    I see 7000-7200 as the obvious support level, seems everybody is watching that area. It will probably go much lower surprising everybody.

  3. zentrader.ca » Blog Archive » DJIA, TSX, and Bear Market Thoughts on January 10th, 2009

    [...] a look at this chart from the early 30’s to remind yourself that bear markets are a series of lower highs and even [...]

  4. eric on December 4th, 2009

    up over 50% from the low. Were about to crash from here.

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