Stock Market Rallies Do NOT Signal the Bull Market Is Back!

by tradingrebel7B on March 16, 2009

The good news for bulls is that Dow Jones Industrial Average (.DJIA) rallied 53.92 points, equivalent to 0.8% on Friday to close the week out at 7,223.98. After a pretty strong performance all week, that meant that the index was up 9%. Meanwhile, the Nasdaq Composite Index (.COMP) also added 5.4 points, i.e. 0.4% and closed the week at 1,431.50, which is a 10.6% gain for the week. The S&P 500 Index (.SPX) closed at 756.55 on Friday, giving it a gain for the week of 10.7%.

This is all very nice. Moreover, the rallies are set to continue to still higher levels over the coming week or two. However, bear in mind that these are BEAR MARKET RALLIES. Although they are strong, these stock index rallies do NOT indicate that the equity markets have bottomed. Not at all.

Instead, what is happening is that they are finding very long-term technical trendline support and are rebounding from them. Hence, traders can certainly trade the rallies with confidence over the next few weeks. However, do expect the whole picture to turn bearish again quite soon. As for investors, this is STILL not the time to be getting back into stock markets!

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