3 stages of a bear market

Bear markets have three stages – sharp down, reflexive rebound and a drawn-out fundamental downtrend.

Bear markets often START with a sharp and swift decline. After this decline, there is an oversold bounce that retraces a portion of that decline. The longer-term decline then continues, at a slower and more grinding pace, as the fundamentals deteriorate.

Friday's rally and liquidity flush, most likely does not negate the continuation of the bear market. The amount of technical damage combined with a recession, and a potential surge in credit defaults almost ensures another leg of the beg market is yet to come.

Garrett Roche CFA, FRM is a global multi-asset/macro investment strategist