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 also suggests that bear markets consist of three down legs with reflexive rebounds in between.
However, the “bear market” is only one-half of a vastly more important concept – the “Full Market Cycle.”
The Full Market Cycle