So is this the Santa clause/year-end/super-bear rally we've been waiting for? The S&P 500 has just gained 18% in the past five trading days. "Does it have legs," ask fund managers everywhere who are suffering from performance-anxiety attacks.
Well, we're currently in what I call a mid-cap rally, where mid-cap stocks outperform small-cap and large-cap stocks. Last time the mid-caps led the market we had a 70-day rally from March to May 2008.
Some say that the March rally had legs because it kicked off with a Lowry's 90-90 day on March 19th. However, the October rally had two 90-90 days on Oct 13th and Oct 28th; that rally turned out to be short-lived, lasting only 3 weeks. Clearly, 90-90 day was not the answer.
I recorded all the bear market rallies lasting longer than 1 day from both the 2000-2002 bear and the current bear.
| Start | End | Length (days) | Leadership (overall) |
| 10/10/2008 | 10/13/2008 | 3 | Large-cap |
| 7/23/2002 | 8/23/2002 | 31 | Large-cap |
| 2/6/2008 | 2/26/2008 | 20 | Mid-cap |
| 11/26/2007 | 12/10/2007 | 14 | Mid-cap |
| 3/10/2008 | 5/19/2008 | 70 | Mid-cap |
| 4/6/2001 | 5/18/2001 | 42 | Mid-cap |
| 10/27/2008 | 11/4/2008 | 8 | Small-cap |
| 1/22/2008 | 2/1/2008 | 10 | Small-cap |
| 7/15/2008 | 8/11/2008 | 27 | Small-cap |
| 10/17/2008 | 10/20/2008 | 3 | Small-cap |
| 12/17/2007 | 12/26/2007 | 9 | Small-cap |
Average large-cap bear market rally = 17 days
Average mid-cap bear market rally = 36.5 days
Average small-cap bear market rally = 11.4 days
It appears that the average mid-cap rally lasts longer than the average large-cap or small-cap rally. Does someone have an explanation for why mid-cap rallies last longer? Otherwise, it could simply be a case of curve fitting.
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