In a recent post, I discussed the "3-stages of a bear market." To wit:
"Yes, the market will rally, and likely substantially so. But, let me remind you of Bob Farrell's Rule #8 from our recent newsletter:
Bear markets have three stages - sharp down, reflexive rebound and a drawn-out fundamental downtrend
- Bear markets often START with a sharp and swift decline.
- After this decline, there is an oversold bounce that retraces a portion of that decline.
- The longer-term decline then continues, at a slower and more grinding pace, as the fundamentals deteriorate.
Dow Theory