Last Week's Stock Rally May Have Been a Bull Trap Before Another Market Crash
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A bull trap occurs when there is a temporary bullish shift within a broader downtrend, misleading traders. Last week's rally may have been a bull trap before another market crash.
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There's no clear evidence the rally will continue. Looking back historically provides mixed signals on what happens after a strong early November stock rise.
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Important to watch how Treasurys move relative to stocks. If Treasurys rally as stocks pull back, it suggests last week was a bull trap.
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Conditions still favor an impending stock crash - small caps look vulnerable, utilities signal risk-off, commodities not turning around. Don't assume the rally continues.
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The overall message is not to get trapped into bullishness. Intermarket signals suggest more rain ahead even after last week's short-term market rise.