Strong Bear Market Rally Possible

Update as of 10/6 Close - USE LINK BELOW:
http://ciovaccocapital.com/wordpress/index.php/stock-market-us/trends-remain-...
We have been calling for the markets to make new lows for eight weeks. The new low occurred on Monday. Given the similarities to March 2008 that have surfaced since Monday's low of 1,074 on the S&P 500, it is prudent to understand how sharp bear market rallies can be. The bear market rally off the March 2008 lows pushed the S&P 500 14% higher.

Our concerns are not related to the end of the bear market or the start of a new bull market. The bias over the coming months remains down. We remain confident stocks will make lower lows in the coming months. However, we must respect that bear market rallies can be strong and that they can last for several weeks (even 1 to 3 months).

Here are our comments from late last night: The market is sending some mixed signals right now. The commodities markets are flashing deflationary/bearish signals similar to what we saw in August 2008. Stocks and all risk assets performed very poorly from August to November 2008. The stock market looks very similar to an intermediate bear market low made in March 2008. Global stocks performed very well during the period March - May 2008. The S&P 500 rallied over 14%. The rally was retraced by 100% later in 2008, but 14% is a big move.

Updates Here: http://www.ciovaccocapital.com/wordpress/

Category:

News & Politics

Tags:

• bear
• market
• rally
• stock
• 2011
• Q4
• Year
• end
• Rally
• In
• Stocks