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Investors are jumping the gun in declaring that the stock market will now leap to new all-time highs.

Despite the U.S. stock market’s huge rally on Monday, the tech-heavy Nasdaq Composite COMP +4.35%
is still more than 7% below its all-time high. The Dow Jones Industrial Average DJIA +2.81% and the S&P 500 SPX +3.26%
remain in bear markets and are both 5% below their respective highs.

Why Monday’s surge may be a bear-market rally was pointed out on Monday morning by Sam Stovall, chief investment strategist at CFRA. He wrote that “nearly two-thirds of all bear markets since WWII started with double-digit declines that recovered to within 2% or higher of the 200-day moving average only to reverse course and dive once again to set an even lower low.”

Explosive rallies serve to keep hope alive, luring unsuspecting investors back into the market, often just before the market begins a new leg down. That’s why big rallies are more common in bear markets than bullish ones.