Reflexive Rebound

the famed reflexive rebound that occurs between the down-legs of the secular bear market, as so eloquently referenced in Rule #8 of Bob Farrell’s Market Rules to Remember (it goes like this – “Bear markets have three phases: sharp down, reflexive rebound, and a long fundamental drawn-out decline”). By “reflexive rebound” what is meant is a real bear market rally that can last between four to eight months and have the capacity to rebound between 25% and 50%, as opposed to the countless flashy but not particularly tradable rallies that typically last four to eight weeks and post a 10% to 20% bounce.

full post here.