The term “rally” is used loosely when referring to upward swings in markets. The duration of a rally is what varies from one extreme to another, and is relative depending on the time frame used when analyzing markets. A rally to a day trader may be the first 30 minutes of the trading day in which price swings continue to reach new highs, whereas a portfolio manager for a large retirement fund looking at a much larger picture may perceive the last calendar quarter as a rally, even if the previous year was a bear market.
A rally is caused by a significant increase in demand resulting from a large influx of investment capital into the market. This leads to the bidding up of prices. The length or magnitude of a rally depends on the depth of buyers along with the amount of selling pressure they face. For example, if there is a large pool of buyers but few investors willing to sell, there is likely to be a large rally. If, however, the same large pool of buyers is matched by a similar amount of sellers, the rally is likely to be short and the price movement minimal.
The World Rally Championship now visits nearly all continents, taking its stylish sideways driving style and specialized cars to a vast global market, estimated by some to be second only to the Formula One juggernaut. This has produced unprecedented levels of visibility in recent years, but in many ways removed the motorsport from its grassroots past. For better or worse, rally has become a lucrative business.
The First World War brought a lull to rallying. The Monte Carlo Rally was not resuscitated until 1924, but since then, apart from World War II and its aftermath, it has been an annual event and remains a regular round of the World Rally Championship. In the 1930s, helped by the tough winters, it became the premier European rally, attracting 300 or more participants.
In 1980, a German car maker, Audi, at that time not noted for their interest in rallying, introduced a rather large and heavy coupé version of their family saloon, installed a turbocharged 2.1 litre five-cylinder engine, and fitted it with four-wheel drive. Thus the Audi Quattro was born. International regulations had prohibited four-wheel drive; but FISA accepted that this was a genuine production car, and changed the rules. The Quattro quickly became the car to beat on snow, ice or gravel; and in 1983 took Hannu Mikkola to the World Rally Championship title. Other manufacturers had no production four-wheel drive car on which to base their response, so FISA was persuaded to change the rules, and open the Championship to cars in Group B. This allowed cars to be much further removed from production models, and so was created a generation of rallying supercars, of which the most radical and impressive were the Peugeot 205 T16, Renault 5 Turbo and the Lancia Delta S4, with flimsy fibreglass bodies roughly the shape of the standard car tacked onto lightweight spaceframe chassis, four-wheel drive, and power outputs reportedly as high as 600 hp (450 kW). Further Group B cars were developed by Ford (the RS200), British Leyland (the Metro 6R4) and many others, but these were less successful.
The causes and characteristics of rallies vary, but most financial theorists agree that economic cycles and investor sentiment both play a role in the creation and momentum of rallies. In general, information about a strong or strengthening economy, indicated by high employment, high disposable income, low inflation and high business profits usually ushers in a rally. The existence of several new trading highs for well-known companies also indicates a rally is occurring. It is important to note that government involvement affects rallies: Changing the federal funds rate or tax rates indirectly encourages economic expansion or contraction.
"bring together," c.1600, from French rallier, from Old French ralier "reassemble, unite again," from re- "again" (see re-) + alier "unite" (see ally (v.)). Intransitive meaning "pull together hastily, recover order, revive, rouse" is from 1660s. Related: Rallied; rallying. Rally round the flag (1862) is a line from popular American Civil War song "Battle Cry of Freedom."