https://www.morningstar.com/articles/1105388/how-do-you-tell-a-bear-market-rally-in-stocks-from-a-new-bull-run
“A case in point: After falling to a new low of 12,581.2 on March 14 the Nasdaq rallied for the next two weeks hitting 14,619.6 on March 29, a 16% gain. The tech-heavy index began another descent that would drag it down 23% to 11,264.4 by May 24. It ultimately slid to a 52-week low of 10,646.10 on June 16, for a loss of 33.44% from its all-time high on Nov. 19. By yesterday's close the index had risen to 12,162.6 for a gain of 15% from its June low. ”
- “If a recession occurs sometime in the second half of 2022, the stock market could drop another 10% or more. Bear markets that coincide with recessions tend to decline nearly 35% on average and last for 15.3 months. If this were to be the case, the sooner it would start, the sooner it would be over given that a bear market bottoms four months before a recession, setting the stage for a “shorter than average” recessionary bear market.
- If a recession occurs in 2023 that would make the current bear market twice as long as average, and likely lead to numerous bear-market rallies that eventually fail as they have in past instances. Clissold cites 1973, 1978, and 2000 as past bear markets that saw numerous rallies between their start and finish with a maximum gain of 15.9%, 14.3%, and 15.5%, respectively.
- The last and best scenario is if there is no recession at all. Stocks decline on average by 25% in a nonrecessionary bear market over 9.1 months. In the past 50 years, the average decline has been 18% over 6.8 months.”