It’s just a blip within this bear.

That’s what a feature on WSJ by Tom Lauricella suggests. From the March 9 lows, many are calling the recent rally to be the beginning of a new bull market.  But history suggests that all this could be a bull market within a bear market.  Many analysts are saying, and quite appropriately so, that the rise happened so fast and within a short period of time that we are all setting up for a pull back.  While it might not be for the lows seen in March, a little correction would and should happen.

After falling 33.8% last year, the Dow Jones Industrial Average finished last week 34% above its 12-year closing low on March 9. The Standard & Poor’s 500-stock index is up nearly 40% from its low on that date.

The traditional definition of a bull market is a 20% gain from a low point and a bear market is a 20% decline from a high. But the Dow remains 38% below its record close in October 2007, and the S&P is nearly 40% below its record.

During a secular bull market, the cyclical, or shorter, bull markets within them gained 110% on average and lasted nearly three years. Within secular bear markets, however, the gains in cyclical bull markets averaged 64% and generally were over within a year and a half.

And here’s a little graph from the article, showing different bear markets in the past and the pattern they have followed (various upsides within the bear market):

bear

More HERE.

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