What are the differences between a bull market rally and a bear market rally?
Obviously, you understand that “bear market rallies” happen in the midst of bear markets. These are usually represented very swift and powerful moves up. I recall reading somewhere that something like 7 out of 10 of our biggest “up days” in the market occurred during bear markets. (I am sorry that I could not cite the source for that data, but it’s close to that.) Often times we see what is know as a “short covering rally” during the midst that of bear markets. What is that? That’s when there are a lot of short sellers in the market and they start closing out their short positions (that means they have to buy back the stock that they sold.) When people buy stock, it drives up the price. Since other short sellers will lose more money when the stock rises, they will panic and buy back their stock to prevent further loss and drive the stock up higher. This happens more often than you would think. Sometimes you’ll see it happen when bad news comes out about a company. The stock moves up, I
