Bear market rallies are one of the most deceptive phases in a market downturn. They feel like the real recovery—but they’re not. These sharp, short-term moves higher happen while the broader trend remains bearish, often igniting hope that the worst is over just before another leg lower.
These rallies are fueled by a combination of oversold technical conditions, short-covering, and misplaced optimism—usually triggered by a single data point or policy shift that temporarily eases investor fear. But because the underlying fundamentals haven’t truly improved, the gains eventually fade. Stocks roll back over and head toward new lows.
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