分类
外汇基础知识

什么是熊市(Bear Market)?

Are We Seeing the Failure of a Bear Market Rally or Just a Healthy Pullback?

Stocks are 什么是熊市(Bear Market)? set to gap lower to start the week. It is not a big surprise that the market is finally undergoing corrective action after a fast and furious run, but the billion-dollar question is how far it will go. Is 什么是熊市(Bear Market)? this just a reset that will set the stage for another push higher, or is it the failure of a bear market rally that the pessimists have warned us about?

The good news is we don't 什么是熊市(Bear Market)? need to answer that question today, but we do need to increase our vigilance and be ready in case the selling pressure accelerates. The S&P 500 can pull back to 4,160 or so without doing major technical damage, but such a move would cause some pain and there likely will be some rotational action that is going to be harder on sectors such as growth, biotechnology, small-caps and technology.

The thing that is particularly interesting about the market right now is how quickly the narrative is shifting. During the big run off the June lows, the narrative was that the market had already priced in the worst and that it could handle a hawkish Fed. There was increased optimism that the strong labor market would provide enough strength to withstand a series of rate hikes and avoid a recession. The drop in energy and commodity prices also provided hope that inflation had peaked.

Last week the narrative started to become less positive. The Fed has made it clear that it is not likely to pivot to a more dovish stance very quickly, and there is increased debate over whether the unemployment rate needs to increase in order to effectively deal with inflation.

Some bulls contend that there has never been a bear market bounce of this magnitude that did not produce a bottom. We shall see, but we have never had economic conditions similar to this at this stage of the market cycle. I have little confidence that there is a historical precedent for this market.

As I've been discussing, I have raised quite a bit of cash into the recent strength primarily because many stocks I favor have become technically extended and I am not seeing many good entry points. Even after a few days of weakness, it 什么是熊市(Bear Market)? is still going to take more work for better charts to develop.

This is the time for caution. Don'什么是熊市(Bear Market)? t be in a rush to put valuable capital back to work. If you are going to trade, then keep time frames short and don't forget that we are going to be dealing with negative seasonality for a while.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

It's time to 'play defense' with stocks experiencing a classic bear-market rally, Wells Fargo warns

Stocks won't exit the bear market until the Federal Reserve's last interest rate hike, according to Wells Fargo.

Investors need to be cautious despite major indices' recent gains, CIO Darrell Cronk told Bloomberg TV.

"This very much looks like a bear market rally… you've got to play defense," Cronk 什么是熊市(Bear Market)? said.

It's time for investors to get defensive and consider jumping out of stocks, which look caught in the middle of a bear-market rally, according to a Wells Fargo investment chief.

Darrell Cronk told Bloomberg TV he's skeptical about how well equities will perform over the rest of 2022, even though the S&P 500 has climbed more than 15% since hitting a low for the year in June.

"This is the question: 什么是熊市(Bear Market)? Is this a bear market rally or the start of a new bull?" Cronk, CIO for Wells Fargo Wealth and Investment Management, said on Friday. "This to us very much looks like a bear market rally."

"People forget that as bear markets get older, the bear market rallies get larger. This is the largest one we've seen, we've had six S&P 500 rallies during this bear of 7% or greater."

He believes the S&P 500's recent rally isn't sustainable, given the US benchmark has failed since April to break above its 200-day moving average. If stocks rise or fall through this key resistance level, it's seen as a change in long-term direction.

"The fact that we've failed off the 200-day to us still says 什么是熊市(Bear Market)? that you've got to play defense," Cronk said — suggesting they pivot away from stocks, and into less risky and volatile markets such as bonds or cash.

The Wells Fargo CIO said bear markets don't end three things happen: housing market forward indicators hit a bottom, earnings estimates fall significantly or trough, and the Federal Reserve is on the verge of stopping its interest rate hikes.

"You've got to get closer to the Fed being at or within sight of their last interest rate hike," he said. "We think we're still probably at least six months away from that."

"So, bear market rally — play defense here from a risk standpoint," Cronk said.

Markets have gained thanks to some investors' expectations that the Fed will pivot to start cutting interest rates soon. But Wall Street strategists have warned that the US central bank's current hiking cycle won't end until 2023.

Analysts at Goldman Sachs, Bank of America, and HSBC all said last week that the Fed will likely continue to hike until nominal rates are at 4%, around 150 basis 什么是熊市(Bear Market)? points above their current level.

What is a bear market? S&P 500 slides more than 20% from peak, confirming the end of its pandemic bull run

The S&P 500 confirmed Monday that it had fallen into a bear market, 什么是熊市(Bear Market)? 什么是熊市(Bear Market)? at least according to one popular metric. What, exactly, does that mean?

Here’s a breakdown on the bears and the bulls — and the criteria used to describe up and down markets.

What happened?

The S&P 500 SPX, -2.14% fell 151.23 points, or 3.9%, Monday to finish at 3,749.63, its lowest close since Jan. 29, 2021. More important, for market taxonomists, the finish was 21.8% below its record close of 4,796.56 on Jan. 3. That’s key, because a bear market is popularly defined as a drop 什么是熊市(Bear Market)? of at least 20% from a recent peak.

So does that mean a bear market began Thursday? No. This is where it can get a little complicated.

According to the market-dating criteria used by Dow Jones Market Data, Thursday’s finish means that the pandemic bull market ended and the bear market began with the Jan. 3 什么是熊市(Bear Market)? record close. In other words, Thursday’s close instead confirmed that the large-cap U.S. benchmark has been in a bear market since almost the beginning of the year.

To be sure, the criteria used to mark bull and bear markets is arbitrary. There’s no universal system. For more detail on other approaches, take a look at this archived article that examined a controversy over the start date of the post-financial-crisis bull market that died in 什么是熊市(Bear Market)? 2020 with the onset of the COVID-19 pandemic market plunge.

When does a bear market end?

The end of a bear market is confirmed when an asset rises at least 20% from a recent low.

In other words, the S&P 500 wouldn’t exit the bear market by merely moving back within less than 20% of its Jan. 3 finish.

And again, the end of the bear market and the start of the new bull market would be backdated to the date of the low.

Why bulls and bears?

There’s a lot of market lore around the origin of the terms bull and bear, which remain rather murky.

One of the more often used explanations is that a bull on the attack swipes its horns upward, while a bear swats downward with its paws.

According to the folks at Merriam-Webster, however, it was the bear that arrived first, making its appearance in terminology around the time of the South Sea Bubble in the 18th century.

They noted a proverb advising that it wasn’t wise “to sell the bear’s skin before one has caught the bear.”

“By the 18th century, the term bearskin was being used in the phrase ‘to sell (or buy) the bearskin’ and in the name ‘bearskin jobber,’ referring to one selling the ‘bearskin,” the dictionary site said, noting that “bearskin” was quickly 什么是熊市(Bear Market)? shortened to “bear” and was applied to stock being sold by a speculator as well as the speculator selling 什么是熊市(Bear Market)? the stock.

According to this explanation, the term “bull” came later to refer to a speculator buying a stock in anticipation of its rise — a term that was seen as a “fitting alter ego to the bear,” according to Merriam-Webster.

How long will the bear market last?

Bear Market

Earlier this week, the S&P 500 officially dipped into a bear market territory, defined as a decline of 20% off its recent peak. The broad benchmark of U.S. stock market performance has dropped precipitously in 2022 thanks to a combination of high inflation, rising interest rates and fear of a potential recession.

Now that the bear market has arrived, how long will it last?

UBS highlighted historical data suggesting that the average bear market since World War II endures for 16 months. Given that S&P 500 reached its all-time high of 4,818.62 on Jan. 4, the current bear market has lasted six months so far.

Therefore, the benchmark case would put the endpoint sometime in April of next year. However, bear markets range dramatically in length.

The shortest lasted just over one month (the drop in February and March of 2020, headed into the pandemic). There were three other bear markets since World War II that lasted eight months or fewer.

However, there is precedent for prolonged bear markets as well. The aftermath of 什么是熊市(Bear Market)? the dot-com bubble led to a market slump that lingered for 31 months. There were also longer-than-20-month bear markets in the 1940s, 1970s and 1980s.

Bear markets also differ in the extent of their declines.

By definition, the slide from the peak has to drop more than 20%. However, sometimes the decline does not go much further than this. A drop in 1956/1957 reached just 21.6%, for example. Another one in 1966 bottomed out after a 22.2% retreat.

On average, the typical bear market includes a decline of 35.1%, according to the data spotlighted by UBS. On the high end, the bear market following the financial crisis in 2007 reached 56.8%. Meanwhile, the dot-com collapse topped out at 49.1%.

A 35% drop in the S&P 500 this time around would put the index just below 3,130. For its part, UBS sees a slightly shallower retreat. The firm predicts a 31% decline from the peak, with the S&P 500 reaching 3,300.

For more 什么是熊市(Bear Market)? on how long it will take for Wall Street to recover from the current bear market, see why famed investor Lee Cooperman thinks the S&P 500 won't return to its recent highs again for "quite some time."