Bear Market Rallly or Bear Market Bottom?

Posted October 21, 2011

After the stock market’s steep decline from July through September the market has been extremely volatile and has traded in a sideways range for the last two months. There is currently a debate as to whether the stock market’s rally for the last week is just another short-term “bear market” rally similar to the four others in the last two months or it’s a sign that the bear market has made a bottom and a new bull market will begin soon. One thing for sure, it will take time to know the answer. 

After the initial 19% decline for the S&P 500 index that began the last week of July the stock market has traded in a sideways trading range for the last two months. It made a new low just over a week ago at 1,075 and looked poised for another leg down but instead the market has rallied about 8.5% over the last week and is approaching the upper end of its trading range again. The market’s trading action since July looks very similar to the October 2007 – March 2008 time period which was phase 1 of the 2008/09 bear market. 

Stock Market's Recent Trading Action

 

 

 

 

 

 

 

 

 

 

Click here to read more and to compare phase 1 of the 2008/2009 bear market with the current market.