Once more, with feeling.
The Nasdaq Composite
COMP,
But investors don’t need a long memory to recall that the last such exit from a bear market, on Aug. 10, proved short-lived. The tech-heavy index peaked just a few trading days later on Aug. 15, then slumped back into a bear market — dropping 20% from that high — by Oct. 11.
That isn’t an uncommon phenomenon.
As the table below shows, the average and median performance for the Nasdaq Composite after exiting a bear, using data going back to 1974, are positive from one week to five years later, but with some big exceptions:
Archive: Nasdaq bull market? A history of head fakes says it’s too early to celebrate.
So what happened Monday? The Nasdaq eked out a gain of 0.2%, ending at 12,256.91, up 20.01% from its Dec. 28 closing low of 10,213.29, according to Dow Jones Market Data.
Under the criteria used by Dow Jones Market Data and many other market watchers, a 20% rise from a recent low signals the start of a bull market while a 20% fall signals the start of a bear market. That means the market is always in either a bull or bear market. Also, the market doesn’t hop into and out of either a bull or bear each time it crosses the threshold again. It takes another 10% or 20% move in the opposite direction to change the status.
Not everyone agrees. Some analysts contend a new bull market doesn’t begin until the previous high is taken out, while others use more complicated criteria.
The just-completed bear market was nonetheless the Nasdaq Composite’s longest, at 143 trading days, since a 218-day bear that ended in December 2008. And it took 89 trading days for the index to exit a bear after hitting its market low, the longest such period since the July 1984 to January 1985 stretch, which took 126 trading days, according to Dow Jones Market Data.
The Nasdaq Composite ended Monday at its highest since Sept. 12, while the S&P 500 index
SPX,
— Ken Jimenez contributed to this article.
