Is the bear market over?
Many people believe that the bear market is over. They say that the market has bottomed out and that we’re starting to see a turnaround. However, this is only partially true. The market has certainly fallen, but it’s not clear yet if it’s ready to rebound. We’ll have to wait and see what happens next.
Despite stocks rising at the end of the second quarter, which can be seen as a precursor to a market turnaround, the bear market likely isn’t over.
Keith Lerner, Co-Chief Investment Officer at Truist, said on Yahoo Finance Live that “I don’t know that it’s over yet”. He said that in the last ten years, there were a lot of V-shaped recoveries that followed a similar pattern and this time is no different. They were caused because the Federal Reserve had the market’s back.”
In late June, the markets have stabilized after some relief in gas prices; which followed no new hawkish surprises from Federal Reserve members.
SP500 is the bear market over
Big-cap tech stocks and a fast-rising stock market have helped recover losses caused by rate hikes and recession worries. The last five trading sessions have seen gains; the Dow Jones Industrial Average has gained 3% and the S&P 500 is up more than 3%. The Nasdaq Composite has also rallied over 3% in the past five trading days.
There’s a possibility that the market will shift back to a “bottoming process,”; where we’d have up moves, followed by moves back down to test that support level. The Fed is no longer going to save the stock market, and this is something that Lerner suggests could be due to recent events.
Some Wall Street strategists are predicting the recent rally will continue based on improved market sentiment. In a note on Monday, Morgan Stanley bearish strategist Mike Wilson opined; that he expects stocks to bounce five to seven percent in the short term.
“Despite the downturn of the last few weeks; the recent massacre in Bitcoin and pullbacks in other assets don’t mean the bear market is going to stay down forever. It’s a reminder that bear markets don’t move in a straight line; setting the table for a bottom/tradable rally going into next Thursday’s FOMC meeting,” noted Julian Emanuel, co-president of Evercore ISI.
Most pros note that the economy is unlikely to recover any time soon, leaving stocks with a downside bias. Shelley also refers to the Fed as an enemy of stocks, and that dark cloud remains for stocks and investors.
When is this bear market over?
There is no one answer to this question. Some people believe that the bear market is over, while others believe that it’s just starting. However, one thing is for sure – the market has been volatile lately. So whether you’re a buyer or a seller; it’s important to stay cautious and understand the risks involved in any investment.