Following the fastest 37% drop in stock markets ever (February 19 to March 23), short-covering and dip-buying bought a sharp bounce in April. Regret over losses quickly morphed to fear of missing gains as risky assets rallied and speculators piled on. It is important to understand that dramatic rebounds are typical within bear market down channels. Gary Shilling reminds of counter-trend rallies within the infamous 1929 to '32 bear market in his May 2020 Insight this week, as follows:
The Dow Jones Industrial Average peaked at 381 on September 3, 1929 and then plunged 48%