If you find yourself witnessing a relief How to buy an elephant rally, take a step back and consider the underlying factors that may have triggered it. Remember that markets are ever-changing, and it’s crucial to stay informed and make informed decisions based on thorough analysis and research. The information contained on this website is solely for educational purposes, and does not constitute investment advice.

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1. Relief rallies happen in many different asset classes such as stocks, bonds, and commodities.
2. Markets also grew wary about rising bond yields with 10-year Treasury yields briefly reaching 3 percent for the first time in years.
3. In finance, a relief rally can be defined as a temporary and often sharp increase in the price of stocks or other financial assets after a period of extended decline.
4. The fact that Bessent talks like a fiscal hawk was enough to push 10-year Treasury yields down by 6 basis points, though whether he will be able to trim deficits while rolling over due-to-expire tax cuts remains to be seen.

But better-than-expected U.S. gross domestic product later that month and moves by the Chinese government to aid the falling stock market resulted in a strong two-day relief rally in which the S&P 500 rose more than 6 percent. Much of the time, such a rally can last for quite a long time or even months before the continuation of a longer-term descending trend. Since bear markets last for long periods of time, they can correct an emotional drain on investors expecting a market circle back — consequently the what is a good leverage ratio for forex «relief» when indications of a bounce show up.

Two-year yields were down as much as 11 basis points to 4.2621% after a $69 billion auction of the notes was met with solid demand. Bessent’s nomination, which needs to be confirmed by the US Senate before he takes the job, is at odds with Trump’s choices of a series of unorthodox candidates and absolute loyalists for other key positions. Other prominent contenders included former Federal Reserve board member Kevin Warsh and Trump transition co-chair Howard Lutnick, who had the support of Elon Musk. All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional. Become a friend of North Berkeley and we will occasionally send you updates on our investment thinking and events.

Friday’s relief rally after Adani shock leaves investors richer by ₹7.27 trillion

Examples include election results, policy interest rate changes by the U.S Federal Reserve and new industry regulations. Any of these events can trigger a relief rally when the news is not so bad, relative to widespread negative expectations. The term “rally” is used loosely when referring to upward swings in markets. The duration of a rally is what varies from one extreme to another, and is relative depending on the time frame used when analyzing markets. Short-term rallies can result from news stories or events that create a short-term imbalance in supply and demand.

Wagers on the Fed have gone the other way, with the probability of a rate cut in December shrinking to 52%, from atop 70% a month ago. The dollar has been underpinned by the divergence in economic performance between the U.S. and Europe, a point driven home by last week’s PMIs. Asia has been dominated by the market reaction to the choice of fund manager Scott Bessent as incoming U.S. Treasury Secretary, with the main feeling one of relief that he’s a mainstream candidate rather than an unknown. Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance.

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Both the aftermath of the dotcom bubble and the 2007–2008 financial crisis saw several relief rallies for stocks, only to see renewed fears push market prices lower again. A relief rally is a respite from a broader market sell-off that results in temporarily higher securities prices. Relief rallies often occur when anticipated negative news winds up being positive or less severe than expected. More recently, stock market volatility increased in February 2018, amid rising geopolitical tension between the U.S. and North Korea, as well as uncertainty regarding U.S. trade policy.

The frustration of dashed expectations can be painful, but history tells us that these interim rallies are a normal part of the market recovery cycle. A relief rally does not necessarily spell the end of a secular decline, however. Both the dot-com crash and the 2007–2009 financial crisis saw several relief rallies for stocks, only to see renewed fears push market prices lower again.