The sectors of the market that were strongest historically in rallies off bear market bottoms

You need to look at the sectors of the market that were strongest historically in rallies off bear market bottoms. The current rally has had oil&gas and metals as the strongest and that is pointing to this rally failing. Also in prior bear market bottoms a few economic indicators were starting to show that things might be getting better while the media still focused on the ones that said things are terrible. In this market nothing is suggesting things are getting better. The economies of the world have stalled or fallen over a cliff. Of course this might be the worst of it, but that is a guess and not based on forward looking indicators.

The bottom might be near when financials, services, transport, property , technology, insurance and media & advertising sectors sub-sectors mainly lead the rallies - not oil&gas, metals, gold and other speculative sectors as we have seen dominate recent failed rallies and the current one.

Of course fundamentals eventually do affect markets in the short term markets can behave irrationally, but eventually fundamentals usually take over and fundamentals are now so bad for the economy that it doesn’t look good for investing for a long time. Day traders can try to play the movements though and volatility is at an all time high. This is potentially dangerous to inexperienced investors as movements can be erratic and very powerful, with Whipsaw action potentially wiping out anyone using leveraged investments both shorting and going long. This is common during the biggest crashes and bear markets. The Great Depression saw record falls and gains although the trend was strongly downwards as well as periods in the doldrums at and near to the bottom. It was also an erratic market recovery with some big gains followed by big losses and even a much not realised second significant stock market crash in the later 1930s all making sure the index remained in difficulty for 25 years.

Related Posts:

• DOJI: New Lows! New Lows!
• The Market had it’s best 3-week rally since 1928:
• There’s a decent chance we’re in for a real, out-and-out depression.
• A big rally on toxic asset buying today, the real problem became more severe.
• PBS show “The American Century” is named that for a reason, the 20th century was our century as the 19th century was England’s, 18th was France’s, 17th was Spain’s.

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