Milan Cacic
August 22, 2022
Money Education Social media Economy Good reads Commentary In the news News Trending Weekly update Weekly commentaryNOT OUT OF THE WOODS YET, BUT CLOSE!
The market has now recovered 50% of the losses that occurred this year. If we use history is an indicator, what happens next is very important.
Typical bear market rallies, that is, a rise during a bear market that gives people optimism but then goes on to make new lows, does not recover 50% or more of the previous decline in the market. The chart below illustrates each major bear-market rally since the 1920s. It also shows how far the rally went before it reversed. As you can see, it is very rare for bear market rallies to go above a 50% recovery from the lows. This is important because we have now recovered more than 50% of the decline. If we continue moving higher over the next few weeks, we can be more confident that this is a new bull market and not a bear market trap! Only time will tell.
Source: What to make of the market’s rally, Jurrien Timmer, Fidelity Investments Canada,
I have also included a piece from our CIBC Economics team entitled “Canadian CPI: Accelerating core spells trouble”.
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Have a great weekend.
Milan