Big rally today, finally.The Dow was up 380 points, almost 6%, Nasdaq was up 90 points or 7%.
We knew a rally was coming, and then the question is, how much longer is going to last. Is this a 1,2,3 day wonder, is the rally going to last for a few weeks, is it going to last for many months?
There is no way to tell at this point, but one thing I am confident of is that the bear market is not over.
Especially when you have this type of violent rallies.The biggest rallies come in bear markets. Think back over the last few months. All this spetacular rallies we have had and yet we continue to make new lows.
We had the same phenemenon during the thirties. Bear market rallies are always more spetacular then bull market rallies.
In bull markets you have big, violent declines that shake out people, that shake confidence.
I don`t think the bear market is over, maybe a lot of people is going to believe that, especially if this rally carries through.
I wouldn`t be surprised if we had a rally that lasted for many months, I wouldn`t be surprised if the Dow rallied above 8,000 to 8,500.
The Dow as at 6,500, it would be a 2,000 point rally, a 30% rally. People would be saying it is a new bull market. But I don`t think it will be. I think it will just be one of many bear market rallies in a longer term bear market. So its a bull move in a bear market which is the title of my most recent book.
Also, I think that if we have a meaningful rally in the value of US stocks, it will be accompanied by a drop in the dollar and a rise in foreign equities. That means that if this is going to be a big move, I think you will get a bigger move in stocks outside the United States. Foreign stocks will recover more then US stocks.
