"I think we are near the end of a bear market rally," said Gundlach, who referred a quote from another investment specialist, the late Richard Russell: "Bear market rallies
look better than the real thing."
The table shows each of the bear market rallies
since the 1989 high, and we can see that five of the six rallies were over 50% and one added 135%.
Some analysts have begun pointing to the bear market rallies
during the Great Depression and the Lost Decade in Japan during the 1990s.
Bear market rallies
, when the stock market appears to be recovering from a negative trend, are the result of a change in investors' sentiment rather than an indication that matters are improving.
But, in the last two years, the stock market has predicted six out of the last zero economic recoveries --Aathat is, six bear market rallies
that eventually fizzled and led to new lows.
As witnessed in the past: bear market rallies
can be sharp which can surprise most of the investors on the upside and we expect the same to happen if the Nifty (the National Stock Exchange Index) crosses [the] 3,150-3,200 levels, says Rohit Chothani, director at Padmakshi Financial Services, Mumbai.
That said, significant bear market rallies
are likely and should be possible to benefit from them, as happened last week, with some returns over the shorter term.
This bottom will not solidify before August and I will not be surprised to see at least two spectacular so-called Bear Market Rallies
between now and August where the speculators will be feasting.
"At best, we have seen bear market rallies
that were soon overwhelmed by the reality of worsening economic conditions."
"We've had 11 recessions, including this one, in the post-World War II period and in eight of those you had at least one order of increase in real GDP" usually accompanied by bear market rallies
says Shilling, adding that there are three reasons the recession is likely to linger into next year.
"We might see some bear market rallies
. A more sustainable rally can happen only when we see more clarity on the measures taken by the government."
This is a particularly difficult time to read in investment terms-bear markets tend to throw out violent bear market rallies
, only to retrench shortly afterwards (as we are seeing regularly).