As I write this on Tuesday night, Tokyo has opened up strongly, following their 17% drop this week. One would hope the crisis is over and their stock market can get back to business as usual.
However, until a meltdown is no longer a possibility, I do not believe their market is anywhere near normal.
Sometimes, there is a "dead cat bounce." Forgive the imagery, but it is an old Wall Street one. Imagine dropping a dead cat off your roof onto the driveway. It will bounce, maybe not much, but it will bounce. Bear markets do that as well.
There is also a "relief rally," when investors collectively grasp a straw of positive news and are just relieved to feel good again.
And, there is the "short-covering rally," which occurs when investors must buy stocks to cover the stocks they have sold short. It can be a very powerful rally but short.
Whatever type of rally we're seeing in Tokyo tonight . . . it is a mere "bear market rally," not a real "bull market rally."
