It is great to see the market recovers from its recent low (DOW reached 7500 on Nov 20). It is more than 20% from the bottom. Anyone who jumped in at the bottom can celebrates now. However, this is most likely to be a bear market rally. In other words, it is dropping too fast and deserves a technically rebound. Regardless how spectacular the rebound is, it is doomed to drop again. For the market to fully recover, two things have to happen with rally, 1) trading volume should increase significantly as people realize it is time to buy. 2) Junk bond needs to have a rally as well as investor see less risk as economy recover in future. Neither of them is happening this time. It is more likely than not that market is going to test bottom again. probably in a month time. Meanwhile, we shall enjoy this rally and sell into it if you have winners or losers (to offset your capital gain if any). Otherwise, get ready for another dive.
