2019 Dow Recovery ‘Nothing More Than a Bear Market Rally’
Investors might not want to trust the mammoth recovery seen by the Dow Jones and other US stock market indices. | Source: Shutterstock
The Dow Jones Industrial Average and wider US stock market have made extraordinary recoveries in 2019, but several equities analysts warn that stocks remain firmly in a bear market.
The Dow’s rapid recovery in 2019 should receive more skepticism than it has. | Source: Trading View
“History is replete with examples of major recoveries following big sell-offs, many of which turn out to be head fakes otherwise known as bear market rallies.”
She notes that AdMacro Ltd warned its clients that the January jobs report of 304,000 new jobs looked good but hid a recession signal. The US unemployment rate actually rose to 4%, the highest since June 2018.
January data from Challenger, Gray & Christmas points to layoffs rising for six months, compared to previous year’s data. Increased layoffs could be due to mergers and acquisitions, one strategy companies follow to reduce costs.
Commenting on these statistics, DiMartino Booth wrote:
“Every time the three-month average unemployment rate exceeded its six-month average at cycle peaks over the past 50 years — like it did in January — the U.S. economy has experienced a recession.”
Just because equities prices start rising,