Bear Market Bounces

In 2000 the Nasdaq top price got blown out. This even is know today as the Dot-Com bubble. The Nasdaq index reached a high of 8,000 and drop to as low as 2,000. The drop took almost one full year to play out.

In March 2000 Nasdaq hit a top but six months later it bounced to almost come back with 50% of its lows since March 2000 top. This would end up being a bear market rally since late Sept. / Oct. 2000 the Nasdaq continue its decline. It won't been until late summer of 2002 did the Nasdaq bottomed.

Bear Market Rallies

Bear market rallies are significant counter-trend recoveries in stock prices that can last as little as a few days or as long as months before the market reverses to new lows.

Over on investopedia.com is a description of what happens during a bear market rally. The stock market prices appear to rise for a period of time only to end up lower down the road in the future.

It is not predictable that a bear market rally exists until it occurs since lower low may not happen. This is where speculators and traders have to predict and place their bet on before it actually happens.

Even after August 2002 where Nasdaq hit a low it would be tested almost one decade later during the Great Financial Crisis in 2008/09. The test then was a double bottom and price remain steady above the 2,000 points on Nasdaq.

Now two decades later Nasdaq is closer to a all time high than at 2,000, but it does not mean it could fall back to that support price. Nasdaq as an index is now around 13,000 but had peaked near 16,000 at late 2021.

Conclusions

Current market indexes had hit a bear market in 2022. A bear market is defined when the price of asset has drop 20% from its top. Now since the drop has hit a bear market it was not that long that indexes and many multiple stocks had recover a decent amount in price that the drop from its peak prices.

Looking ahead its not known if in fact the current stock market is in a bear market and the recent rise in price is just a bear market bounce. What can be stated is that as of right now it appears that the bear market rally has played out.

As of now the SPY which is index of USA top market cap leaders in multiple sectors is showing some long term weakness. Whether it can break through and continue to rise in price remains to be seen, but it certainly looks like it had headwinds moving forward.

None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!

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