The stock market's recent rebound is nothing more than a classic bear market rally which is likely to hit new lows, according to analysts at Bank of America.
A growing number of experts warn that the bear market rally is about to run out of steam.
The summer stock market rally looks to be almost over according to a recent note from Bank of America chief investment strategist Michael Hartnett who points to data suggesting that recent gains are a "textbook" bear market rally which is poised to soon run out of steam
Since hitting a low point for the year in mid-June, the S&P 500 has jumped more than 15% thanks to better-than- expected economic data.
Despite investor hopes that the worst has passed after a brutal selloff in the first half of 2022, analysts at Bank of America are among experts ramping up warnings.
After four weeks of gains, the market is showing many characteristics of what is likely to be a self-defeating rally, and Hartnett says that everyone is bearish but no one has sold stocks.
According to historical data, out of 43 bear market rallies since 1929 in which the S&P 500 gained over 10%, the average increase is 17.2%.
The Federal Reserve is not near done with rate hikes to combat inflation, which will likely put a ceiling on recent market gains.
Several analysts at the firm have warned recently. The head of the U.S. equity and quantitative strategy at Bank of America said in a note to clients that stock market valuations are too high for the bear market to be over. She wrote that indicators that signal a looming end to the recent bear market rally suggest that a sustained bull market is unlikely.
A bear market rally tends to be narrow in terms of leadership, as evidenced by the fact that the likes of Apple, Amazon andTesla have accounted for some of the market's recent rebound. Since the market low point on June 16, those three stocks have risen by more than 30 percent.
The best-performing stocks during this summer's massive rally are Ford.
The stock market crash isn't over according to an indicator.
Fed officials pledge more big rate hikes until there is a meaningful decline in inflation.
The experts are warning of a bear market rally.
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