Paul Lim, "Is the bear market really over? Watch the VIX"

By on May 31, 2009

Paul Lim reviews some history regarding bear market rallies with Jeffrey N. Kleintop, chief market strategist at LPL Financial and Sam Stovall, chief investment strategist for for Standard & Poor’s.

Mr. Stovall studied re-tests of market lows since 1957, and found the average drop to be 7 percent. However, re-tests following “mega downturns” took the S&P 500 down by an average of 14 percent; which would bring that index down to approximately 800 from its recent high of 929.

Mr. Kleintop reviews the experience of the VIX in a re-test of the 2002 bear market bottom during which the VIX fell to the low 20s during a long bear market rally, rising again during the re-test, but not quite reaching its bear market bottom high of 42.


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