Glossary
Rally
A sustained rise in the price of a stock, index or other asset, from a short bounce lasting days to an advance lasting months.
On this page
A rally is a period of rising prices in a stock, a sector or the whole market. The word has no fixed size or length; it can describe a two-day jump after good news or a months-long climb out of a downturn. What sets a rally apart from ordinary day-to-day noise is a clear, sustained push higher, usually with buying spread across many stocks.
How it works
Rallies start when buyers become more eager than sellers, often in response to a catalyst: strong earnings, a drop in interest rates, a policy announcement or simply prices having fallen far enough to attract bargain hunters. Commentators qualify the word to describe the setting:
- Relief rally. A bounce after a worry eases, such as a better-than-feared inflation report.
- Bear market rally. A sharp but temporary rise inside a longer Bear market. These can be large: during the 2007–2009 bear market, the S&P 500 had several advances of 10% or more before its final low.
- Broad versus narrow. A rally led by a handful of giant stocks is narrower than one in which most stocks rise. Market breadth measures that difference.
What to watch for
Not every rally lasts. Signs that one is broad and durable include rising Trading volume, an advance-decline line climbing with the index, and leadership spreading across sectors. Rallies on light volume or driven by short sellers covering their bets, a Short squeeze, can fade quickly. A brief bounce that gives way to new lows is often called a Dead Cat Bounce, though that label is applied only in hindsight.