Sunday, March 09, 2008

Sucker Rallies Graphically Depicted

I see (via The Big Picture) an interesting graph depicting how the U.S. stockmarket either in anticipation of predicted Fed interest rate cuts or as a reaction to rate cuts that were unexpected or unuexpectedly large, rallied only to fall back later when market participants reminded themselves of the reason why these rate cuts were implemented. That fits the definition of sucker rallies, namely temporary rallies during a bear market.This pattern was also seen during the 2001 recession.


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