Bear Markets Have The Biggest Bounce Back Days

Image Source: Unsplash

The tech-heavy Nasdaq index closed Friday -22% from its November high. As usual, a world of talking heads who never see downturns coming are urging listeners to buy at every price. We should keep in mind that when true cycle bottoms arrive, few feel like it’s a good time to buy. It’s also important to understand that as shown below, huge bounce-back rallies are a recurring feature of ongoing bear markets. Buyers beware.

Large rallies? Be careful: looking at top 20 largest one-day increases for NASDAQ, 16 of them were in bear markets; 2 out of 4 that weren’t in bear markets were on days immediately after a bear ended (3/10/2009 and 3/24/2020) pic.twitter.com/bgaSmZGnoj

— Liz Ann Sonders (@LizAnnSonders) March 14, 2022