What Does a Bear Market Rally Look Like?

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.

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.

Comments

[investor88:]

Excellent chart presented to show that it may be risky to presume the "all clear" based on powerful bear rallies, rocket launched bear rallies.

2008 Nov 05 09:10 AM

[xsuddensam:]

Someone recently said that the biggest one day bull market rally was around 300 points and that all those that exceed 300 points are bear market rallies.

Interesting, if true.

2008 Nov 05 10:46 PM

[Paul J. Lamont:]

This is indeed a great chart. In fact, half of this post is so good it could have only come directly from Lamont Trading Advisors' Investment Analysis Report.

If you are going to copy us, at least quote us.

2008 Nov 07 12:28 PM

[Jeff Pierce:]

Pauljlamont,

I did quote you on my blog, when Seeking Alpha chose this article they removed the quotes for whatever reason. I'm sorry for the confusing, but I just want you to know that I did give you credit on my site, with a link to the original article.

Zt

2008 Nov 07 01:06 PM

[Paul J. Lamont:]

Yes, thanks. The free snippet of the Report can also be found on SA.

seekingalpha.com/artic...

2008 Nov 07 02:23 PM

[Mark Stewart:]

Guys thanks for a lot of the post on here and the site content. There is some really good information on this site Keep up the good work.

Mar 10 02:54 PM