There have been five major bear markets in the S&P since the Depression, with each one experiencing rallies along the way that turned out to be false dawns. Each of these rallies felt real at the time, and there was a solid belief that the bad news that caused the initial crash was now out of the way. Yet each of these bear-market rallies ultimately led to disappointment.
Now, of course, this time it may be different – with the Fed’s and the Treasury’s gigantic stimulus measures – but we would offer our readers some historical context to help them assess the risks for themselves. The top chart shows the average of 12 bear-market rallies over the last 5 major bear markets going back to 1929, vs today’s rally. We can see today’s rally is stretched relative to the average (and larger than the one that followed the 1929 crash).
This is an excerpt from the report "Bear Market Rallies - A Historical Context"; you can access the full report under variantperception.com .