How Do You Tell a Bear Market Rally in Stocks From a New Bull Run?

Also this week: Inside the tech-stock rally, how a top T. Rowe manager is positioning and 26 stock and fund picks. [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_smartinvestor&utm_content=37686&elqTrackId=bf48fbcb303e4e0fb85a7ae0dcee52cb&elq=fb830bfe638d478a8cab44fc71ad1725&elqaid=37686&elqat=1&elqCampaignId=17686) [Smart Investor] Smart Investor [Tom Lauricella, chief markets editor]( Twitter: [@LauricellaTom]( [Tom Lauricella] One of the basic rules of investing is don’t try to pick a bottom. Or a top, for that matter. Market bottoms – and tops – can only be known in hindsight, and basing investment decisions on those calls is a fool's errand. But knowing that fact does not stop us from wondering. We look at the 12% bounce in stocks from the lows and can’t help but think, “Was that it?” One factor playing into the “that was it” camp is the market’s ability to rally despite another aggressive increase in interest rates by the Federal Reserve this week as well as a second consecutive quarterly decline in GDP, which is normally seen as reflecting a recession. (Though Morningstar’s Preston Caldwell expects the Fed to [start lowering rates in 2023]( and says [we’re not yet really in a recession]( Fed rate hikes and fears of recession were exactly the forces seen as driving stocks into a bear market in the first place. Meanwhile, Morningstar stock analysts are seeing headwinds for key names like [Apple]( reducing fair value estimates on Google parent company [Alphabet]( Facebook parent company [Meta]( and even on [Berkshire Hathaway](. Meanwhile, we’re seeing some interesting trends under the hood of the market. As we [explore here]( the technology stocks and consumer cyclical stocks that took the greatest losses in the sell off have been leading the rebound. What does it mean? Opinions are divided on Wall Street. For example, one top-performing [T. Rowe Price fund manager thinks]( we haven’t yet seen the lows for this market. Which brings us back to our original question. Is the bear market over or not? While we don’t know the answer, we can take a look at the history. As we explore, history shows that [bear markets are filled with lots of bear traps](. Only time will tell for sure. [How Do You Tell a Bear Market Rally in Stocks From a New Bull Run?]( [How Do You Tell a Bear Market Rally in Stocks From a New Bull Run?]( Bear traps can be short, swift and end as quickly as they started. Sandy Ward [Read More]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] Markets and the Economy [How a Top T. Rowe Price Manager Is Positioned for a Continued Bear Market]( [How a Top T. Rowe Price Manager Is Positioned for a Continued Bear Market]( T. Rowe Price All-Cap Opportunities' Justin White holds stocks like Visa and Chubb, names he sees as both inflation- and recession-resistant. Tom Lauricella [Are Solar Stocks a Buy After the Climate Bill Rally?]( [Are Solar Stocks a Buy After the Climate Bill Rally?]( Renewable energy stocks gain on surprise climate bill news. Jakir Hossain [26 Stock and Fund Picks Based on New Expert 2022 Forecasts]( [26 Stock and Fund Picks Based on New Expert 2022 Forecasts]( Here are Morningstar’s best ideas for taking advantage of the updated market forecasts from asset managers. Susan Dziubinski [Is It Too Late to Add Inflation Protection to Your Portfolio?]( [Is It Too Late to Add Inflation Protection to Your Portfolio?]( A closer look at some asset types that can help against inflation. Christine Benz [GDP Report May Have Showed a Decline, but It's Not a Recession]( [GDP Report May Have Showed a Decline, but It's Not a Recession]( While there's a risk of recession for 2023, any decline should be mild and short-lived. Preston Caldwell Chart of the Week [Fed Steps Up Inflation Fight Again, but We See Rates Coming Down in 2023]( [Fed Steps Up Inflation Fight Again, but We See Rates Coming Down in 2023]( We expect a Fed pivot to lowering rates as inflation comes down and the need to shore up the economy grows. [Read More]( Share: [facebook]( [twitter]( [linkedin]( Popular This Week [3 Good Funds Having a Great Year]( These funds from Vanguard, Fidelity and FPA shine in tough times. Russel Kinnel [A Hospice Doctor Shares Lessons About Work, Money, and Life]( Jordan Grumet on his path to financial independence and mastering 'the art of subtraction.' Christine Benz [4 Stock Sectors to Skip]( These sectors present few opportunities in the third quarter of 2022. David Sekera, Susan Dziubinski [The Best Places to Park Your Short-Term Investments]( Yields are important, but so are liquidity considerations and guarantees. Christine Benz [Fidelity Puritan Fund Gets an Upgrade]( We have increased confidence in the fund's manager and resources, says Morningstar's analyst. Emory Zink Listen Now Get the latest investing insights and market updates with [Morningstar’s podcasts]( available on your iPhone, iPad, Android, PC, or smart speaker. Stay connected: [twitter]( [facebook]( [linkedin]( [instagram]( [YouTube]( [Apple News]( [View online]( | [See all newsletters]( | [Share your feedback]( [Unsubscribe]( from this newsletter. Or update your [email preferences](. © 2022 Morningstar, Inc. All Rights Reserved. 22 W. Washington St. Chicago, IL 60602