Short rally doesn't alter the trend – that's down

July's rally has faltered, but that's no surprise. Since 1970, the FTSE All-Share index has shown 13 temporary upswings within a longer-term downtrend.

The markets have been like "a mountain stage in the Tour de France" of late, says Citigroup. The rebound from the mid-July lows, underpinned by financial stocks which had gained 30% by late last week in Britain has faltered over the past few days. If the downtrend of the past year is already resuming, this latest upswing will have been an unusually short bear-market rally.

According to a Citigroup analysis of the FTSE All-Share index, there have been 13 temporary upswings within a longer-term downtrend since 1970, lasting an average of a month. The average gain has been 13.6%. The index had gained 6% since 16 July by last Wednesday before easing back. The best performers in a bear rally are the sectors that were weakest before the bounce.

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