Bear Market Rally? Look at Gains & Volume

April 24, 2009 1:28pm by Barry Ritholtz

In the light of today’s rally, perhaps it would be instructive to look at the volume on some past rallies. Fortunately, William Hester at Hussman Funds has done the heavy lifting for us, as these two charts show:

Changes in S&P 500 Leading to, and Coming Off of, Major Troughs

(Note: Data set = bear-market bottoms since 1940 )

Volume Changes From Major Bottoms

(Note: Data set = bear-market bottoms since 1940 )

Charts courtesy of Hussman Funds

Eventually, one of the Bear market rallies will be the one that is the turnaround. But until then, its guilty until proven innocent.

Source:
Trading Volume Separates Bull Markets from Bear Rallies
William Hester, CFA
Hussman Funds, April 2009
http://www.hussmanfunds.com/rsi/rallyvolume.htm

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