Was This A Bear Market Rally?

Posted on by The INO.com Team

Stocks are ending the week on a sour note after experiencing a three-day rally mid-week that saw the three major indexes gain upwards of +13%. But was this a bear market rally? Or can the upward momentum continue?

What is a bear market rally, you ask? A bear market rally is a sharp short-term increase over days to weeks within a longer-term bear market. Often investors will see this short rally and think that a bottom has been put in and that the bear market is over. However, investors should be cautious as the downward market action will often return, catching investors out.

You may know these rallies by other names such as a "Sucker Rally" or a "Dead Cat Bounce."

The bear market rallies that began in 2000 and 2007 both gained more than 20% before coming to an end. The most massive bear market rally came during the bear market of 1937 when stocks rallied more than 60% before falling again. With that in mind, I would preach caution if you are actively trading.

Back to the indexes, the DOW has been down over -3% on the day, with the S&P 500 losing -2.7% and the NASDAQ losing roughly -2.7%. However, all three indexes will post weekly gains of +13%, +10%, and +9%, respectively.

The dollar has come under pressure after having a stellar run last week to lose -3% for the week and trading back below the 100 level at 98.8.

Gold and crude oil have effectively swapped places this week with gold gaining +8% and crude oil losing -8% for the week, trading at roughly $21 a barrel. You may have noticed that gas is now below $2 a gallon in your area, or it's steeply lower than it has been in recent memory.

Then we come to bitcoin, which will have back to back weekly gains with a gain of +5% this week trading back above the $6,000 level.

Key Levels To Watch Next Week:

Every Success,
Jeremy Lutz
INO.com and MarketClub.com

11 thoughts on “Was This A Bear Market Rally?”

  1. Its a guessing game ! past markets only show what can happen in the future. their not the holy grail, " this is not the last super " The market takes no prisoners. 1929 we did not have a global financial arena of this magnitude. its going much higher !! Right now we have to follow the emotions. "GREED AND FEAR"

  2. I'll just let the Triangles tell me what to do like always; not every business channel or man-on-the-street giving advice. The Triangles signaled to exit long positions and even go short; they were not wrong and I did not argue or make my own opinion. The trend will be what it's going to be, we can't out smart it. Adam always said to follow the trend and that is what the Triangles do. Simple... and I sleep well at night.

      1. Hi Benny,

        Thanks for the question. Here is a great video that explains how you use the Trade Triangles to trade stocks as well as a link to a video outlining how to find new trades.

        How To Use The Trade Triangles For Stocks:

        https://youtu.be/q-NsAVJq898

        How It Works:

        Monthly Triangles determine the trend and initial entry points.

        Weekly Triangles determine timing: Exits and re-entries.

        The last triangle issued on the monthly chart should always be used to identify the overall trend. You use the monthly triangle as an entry point to get into the stock within 24hrs. Then you are to look at the weekly triangles for your exit and re-entry points.

        Key Rule: Always trade with the trend. Make sure your weekly and monthly triangles correspond in direction.

        How to find new trades using the Trade Triangle Scan:

        https://youtu.be/ChANagurWgY

        I will also urge you to take a trail of MarketClub and see what it's all about - https://club.ino.com/join/start/checkout-2020-trial.html

        Best,
        Jeremy

    2. I couldn't have said it any better, Chuck!!! Let the system and Trade Triangles do the work for you.

      Thank you for being a member!!

      Cheers,
      Jeremy

  3. I think, this is purely Bear Market Really, and nothing else. Most of such movement latter proven as an illusion. Meanwhile, long term investors enter in deemed bottom fishing, and even traders attract to capture fast-in fast out quick profits, however, both found wrong and loosing money.

    Recent Bounce in Dow, taken place up-to 22595.06, after forming an initial bottom of 18213.65. We may found even some more positive further such up-ward moves, however, recent or such further bounces may prove as an illusive bull-run. Medium and long term trends are severally damaged, so either investor or trader must wait and watch to find some more confirm signals.

    As per my studies, there is much more further down trend possibilities still remains in Dow (Last Closed at 21636.78) Considering so many Technical as well Fundamental factors, even "Four Figured" or sub 10,000 levels up-to or at around or in between 5,500 to 7,000 marks probabilities just cant ruled out. At present, it is quite difficult even to think about such harsh situation, but one must be prepared for such scenario. One should also remember forever that ever green rule "Everything is Possible and Nothing is Impossible"

  5. Don't be a button picker...if a sold stock has earnings to survive and dividends are above 4 percent,, look very seriously at buying...this is not for traders , but for investment minded for long long term.. income is generated for now and as the stock and earnings recover in the long run so will dividends increase, as you look back income from original investment looks very attractive.. plus you have the ability to capital gains if you need money for something else.. my opinion only !! Nothing in life is guaranteed.... but earnings and wealth are seldom attained by doing nothing

  7. Looking at the 1929 crash and today it looks like we have at least a 20 or 30 percent drop in our future. Keep your powder dry..

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