Stay focused on the long term fundamentals of the market and the dynamics of the real economy. Bear traps coming off of secular highs in the market are not uncommon. In fact, they are more the norm than not. Had one been following the charts, the initial series of lower highs was broken and a series of higher lows and highs ensued during the bear trap retracement period. Chart Courtesy Of Bloomberg Bear traps are notorious for trapping both bulls and bears alike.
Bullish sentiment is rekindled as once again the voice of the buy the dip crowd strengthens.
Shake it off. It was just another great buying opportunity for equities. Bear traps can also be a time where the bears capitulate. After possibly years of being wrong and feeling a fleeting glimpse of vindication during the initial downturn, bearish hopes are dashed as the market again begins the upward retracement. Bear traps suck in the last of the buyers.