Stocks around the Globe recovered sharply last week, bouncing in what may mark a bottom, or represent a Bear Market Rally that will fade in short order. Bear Market Rallies are usually short and explosive in nature as they occur in the wake of excessive selling. This month, the S&P 500 index closed at its lowest level since September 1996, at 676.52 pts. That low represented a decline of nearly 60 % from the index’s record high in October 2007. Many investors expected some type of bounce, with short sellers seen buying back stocks to close out their profitable trades. The S&P has subsequently bounced nearly 12% from its low, trimming its loss for the year to around 16 %. Jack Ablin, chief investment officer at Harris Private Bank, says: “At this stage, we’re snapping back from a heavily oversold situation. Pessimism was so extreme.”
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