Tom Aspray Explains Features Of A Bear Market Rally
Tom Aspray said that sharp rebounds were always to be expected during bear markets. He said it in the context of his recent discussion on the 1987 market crash and past bear markets. But his focus was to highlight the six-day rally that took the S&P 500 up 19% from the lows that started on October 28, 2008.
Result of the six-day rally
During the first rally in 2008 bear market, the press said that the market was in the process of establishing a bottom. But the S&P 500 was making a new low even seven days after the rally. The market commentators delivered similar comment after the last week’s three-day rally. But Tom Aspray wasn’t convinced with those comments.
Tom’s vision of bear markets
He said that it is necessary to acknowledge and navigate bear market rallies in order to understand the bear markets. He gave example of Invesco QQQ Trust (QQQ) that witnessed a high of $192.72 at last Thursday’s high point. Tom said that it was just a few cents above the 38.2% Fibonacci retracement resistance at $192.64.
He further said that on Thursday, Nasdaq 100 Advance/Decline line closed above its Weighted Market Average (WMA) but it reversed on Friday. The QQQ closed 3.4% the very next day. He raised a question that was had the rally already over.
But all wasn’t over. He said that the bear market followed a type of continuation pattern with a brief pause in the major trend. Since the world entered the bear market, it would see severalbear market rallies.