Last Wednesday, October 9, 2002 the stock market hit
five-year lows. Yesterday, October 16, the Wall Street
Journal called the following four-day gain of 13% in
the Dow Industrials "the biggest four-day percentage
gain since 1933."
So that means the double bottom in the S&P 500 was
successfully tested and the 31-month bear market is
over, right?
Well, they forgot to tell you that there were six false
rallies, ranging from 16% to 48%, before the final
July 8, 1932 bottom. There were also seven four-day
gains during those six false rallies - ranging from 14%
to 21% - that each exceeded the 13% gain that ended
Tuesday . But none of them ended that 34-month bear
market, so why would this smaller 13% four-day gain
end this bear market - at least for that reason alone?
Four days ending % Gain
10/6/31 20.8%
2/11/32 18.5%
11/19/29 17.8%
6/24/31 16.1%
6/25/31 15.4%
2/17/32 14.5%
1/8/32 14.3%
From a purely unbiased analytical point of view,
it's really quite incredible how the first two days,
and thus the best, of the third quarter earnings
reports cannot create net price gains since
Tuesday's predictable closing high (see below).
Meanwhile, to "help" contrarians the financial
media cannot get out of their own way reporting
those calling end of the bear market - again.
It should be obvious what the market is going
to do as the rest of the third quarter reports
come in during the next couple of weeks.
Bob Bronson
Bronson Capital Markets Research
10 day rallies are brutal during O/E weeks...just ask any short who covered back in 1987 on the 9th day...and flipped into calls |
