What is a bear rally? What should I do?

Question: What is a bear rally? What should I do?

During a bear phase - a situation whereby share prices keep on falling to a new low after each rebound - share prices will, at a certain level, stage a steep upturn all of a sudden.

The buying power is so real that it appears as if a new bull market has been born.

Nevertheless, such a bear rally is often short-lived with a retraceable estimate of either 1/3, 1/2, 2/3 or even 100% of the fall.

(Note the recent 1000 points rise in 1 day of the Dow index and today's new low in Dow index)

During such a scenario, an investor should exercise caution when buying shares.


BEAR MARKET

Prices falling from point A -----> lower ----> to new low at point B ----
----------------------> Bear Rally (?% up 1/3, 1/2, 2/3 or 100% of AB)


Ref: Making Mistakes in the Stock Market by Wong Yee