A bear market rally is an opportunity that you are never prepared for. It catches you by surprise and continues to surprise you with how far it can go, and how long it can last. Bear market rallies are mostly unpredictable. But they have the tendency to make you believe that they are real and sustainable. Only long after they fizzle out, do investors come to terms with their true nature and unsustainable ways.
Every bear market rally is an opportunity for investors to make amends for what they failed to do in the previous bull market. You can exit a few investments that you missed selling and raise cash by selling out of weaker bets. The opportunity to rejig your portfolio is also available when you least expect it. So, when you see such an opportunity you should take advantage of such a rally and sell off investments you failed to act upon during the previous bull run.
Typically, small caps, overvalued stocks, hyped themes, and speculative stocks should be pared during a bear market rally. The cash should be deployed very carefully in stocks that have not participated in previous bull runs and have the potential to do well over extended periods of time. A bear market rally is best utilized as a restructuring hour.