Is this a bull trap?

Dow Jones Index was up 197.85 last Friday (22 August 08). Today Nikkei was up 212.62 and Hang Seng Index was up 712.73.

Does this mean that bear market is over and stock market is going to move up from here?

I do not think so; I think what we are seeing is a mini uptrend in a broad bear market.

This is because while stock indices are moving up, their trading volumes are falling. This indicates to me that the uptrend is weak.

You answered your own question. I think we are in for another 15% - 20% drop before we hit bottom. This could take another six to eight months but we will get there eventually. I trade FTSE 100 and expect that to drop to 4500 early next year.

Hi Brend - I agree, the main markets probably have further to fall, possibly a long way. As a trader, I don't trouble too much about where markets will be only as little as 6 months away - I won't have any of my current positions still open then. the direction is crucial of course, but I shall just be following the trend as it is then, not as I think it will be today.

Last Friday I had written an article entited "Market Has Turned More Risk-Adverse" in my website. The article says that as USDJPY (barometer of the stock market) has rebounded from its daily support level of 103.80, and SELL signal from my trading system is getting weak, we will see bear rally in the stock market.

Today in the Asia hours we have seen that Nikkei is up 213.78, Hang Seng Index is up 266.58, S&P/ASX is up 204.50, confirming that my previous prediction is correct.

My system is starting to sigal BUY for USDJPY, so we could possibly see USDJPY moving higher, meaning we could possibly see more of this bear rally over the next few days.