What is the bear rally?
The bear rally is a situation that arises at a time when stock prices are generally directed towards the direction. In the middle of the trend down may occur that shares prices switch directions and rise up to 15-20% after a relatively short period of time. Rally on the bear market usually starts quickly and often without a clear cause. This sudden and significant increase in prices can be misleading, as it will probably end as quickly as it started, followed by a continuation of the declining trend called the bear market. The price increase, such as this, in the middle of the bear market is what is called rally on the bear market.
The reasons for the rally on the bear market may vary depending on a specific assembly and even a particular investor. It is possible that the widespread economic fear has caused the stock market to be sold compared to where it should be. Reflection of prices would only be natural after a certain amount of panic sales, but probably only temporary.
Another reason why a bear rally may occur is thatAfter a prolonged decline in prices, the popular sentiment on stocks may be undervalued and basically "for sale". This type of rally would be less driven by emotions than the first type and more would be powered by a perceived chance to obtain undervalued reserves for long -term shares. Financial advisors can contribute to this sentiment and encourage clients to purchase, as prices may not be so low again.
Of course, it is impossible to say whether the assembly of the bear market is indeed after the end, when analysts have the advantage of backing the market conditions. If everyone thought the rally was a bear rally, it would end much earlier. Here lies the dangerous nature of the bear market. Investors who eager after the end of economic heavy times. The fact that the rally of the bear market is a real thing - real recovery - just to find out that long, prices are back where they were or even lower before the start of the rally. This can seriously disrupt the investors' confidence onThe stock market for a long time and delay the development of a real economic recovery.
In general, faster and higher rally bear market prices increase prices, the faster they return down and the lower them, after the end of everything. This trend has shown several famous bear gatherings. The stock market from 1929 and 1987 followed the bear market. After the relatively prosperous 80s. The 20th century, the Japanese stock index Nikkei saw many rare markets in the whole economic trend, which took place during these years in Japan.