Counter trend moves, different names but similar features!
Bear Market Rally, Suckers Rally, Dead Cat Bounce, Bull trap, Whipsaw, Pullback,and Mean Reversion are all examples of counter trend moves.
They all have common features:
- They are all countertrend moves.
- Their duration is shorter than the main trend.
- They could be faster and more volatile.
- They are not supported by fundamental changes
Bear market rallies are significant counter-trend recoveries in stock prices that can last as little as a few days or as long as months before the market reverses to new lows.
Sucker rally is a slang term referring to the temporary rise in an asset, like a stock, or the market as a whole, which continues just long enough to attract investment by naive or unsuspecting buyers. The buyers are the suckers since they are likely to lose money on the trade when the price heads lower again. This phenomenon is also known as a dead cat bounce, a Bull trap.
Whipsaw describes the movement of stocks in a volatile market when a stock price will suddenly switch direction.
There is no set rule as to how to manage whipsaw movements in a volatile market as it is an unexpected movement.
Pullback is a temporary reversal in the price action of an asset or security.The duration of a pullback is usually only a few consecutive sessions.
According to Investopedia, mean reversion, or reversion to the mean, is a theory used in finance (rooted in a concept well known as regression towards the mean) that suggests that asset price volatility and historical returns eventually will revert to the long-run mean or average level of the entire dataset.
Note: Bear Market Rally and Mean reversion moves are bigger and longer than others.
Best,
(All the information were summarized from different articles on Investopedia)
They all have common features:
- They are all countertrend moves.
- Their duration is shorter than the main trend.
- They could be faster and more volatile.
- They are not supported by fundamental changes
Bear market rallies are significant counter-trend recoveries in stock prices that can last as little as a few days or as long as months before the market reverses to new lows.
Sucker rally is a slang term referring to the temporary rise in an asset, like a stock, or the market as a whole, which continues just long enough to attract investment by naive or unsuspecting buyers. The buyers are the suckers since they are likely to lose money on the trade when the price heads lower again. This phenomenon is also known as a dead cat bounce, a Bull trap.
Whipsaw describes the movement of stocks in a volatile market when a stock price will suddenly switch direction.
There is no set rule as to how to manage whipsaw movements in a volatile market as it is an unexpected movement.
Pullback is a temporary reversal in the price action of an asset or security.The duration of a pullback is usually only a few consecutive sessions.
According to Investopedia, mean reversion, or reversion to the mean, is a theory used in finance (rooted in a concept well known as regression towards the mean) that suggests that asset price volatility and historical returns eventually will revert to the long-run mean or average level of the entire dataset.
Note: Bear Market Rally and Mean reversion moves are bigger and longer than others.
Best,
(All the information were summarized from different articles on Investopedia)
Comment:
The bear market Rally is correct!