Rally

An informal name for a period of rising prices with some persistence behind it. No exchange, regulator or data vendor defines it, there is no threshold in percent and none in duration, so the word marks a stretch of chart rather than a measured quantity. A single rising bar is not usually called a rally; a sequence of them, closing progressively higher, usually is.

Most of the word's working life is spent in compounds, and each compound names a cause rather than a shape. A relief rally follows an event that turned out less damaging than the market had priced. A short covering rally is attributed to positions being bought back rather than to fresh buying, which is the reasoning behind a short squeeze. A bear market rally names a rise inside a longer decline. In every case the cause is attached afterwards, from the outside, and the chart itself carries no record of who was buying or why.

Two things get missed. The word is relative to the frame it is read on, so a rally on a five minute chart can be a single quiet bar on a daily one, and a daily decline contains rallies inside almost every session. And the compound names carry a claim about what comes next: calling a rise a bear market rally asserts that the decline will resume, which is only knowable afterwards. Careful writing describes a rise by its size and its dates, and practitioners disagree about whether the label adds anything beyond that.