The market finally staged a solid bounce after the weakness of the last couple of days. The major averages opened higher and worked their way up most of the session. All the major averages finished near their intraday trading highs as buying continued into the close. The Nasd averages were the strongest with the COMPQ and the NDX gaining 2.66% and 2.86% respectively. The SPX rallied 1.89%. Volume was higher across the board. It gained 11.89% on the New York and 27.01% on the Nasd. Leading stocks rallied as well with the leaders index gaining 2.47% on the day. The index closed near the top of its trading range on lower but well above average volume. After two days of negative action the market finally staged a solid rally. The COMPQ and the SPX both regained their respective 50dma’s after just losing them.
This is encouraging but they must hold this important moving average. The higher volume showed that large institutional players were buying stocks yesterday. After a bear market you rarely see a V bottom. Like you see at important tops, important bottoms are a process, not an event. I believe we are currently in a bottoming process. The market may not be ready to take off in a new bull market just yet, but it is setting up. It is hard to say exactly when it will happen but I think that by sometime in the second quarter we will see the new bull market begin in earnest. This could always be delayed by events between now and then, but it is likely not to far off. Jerry
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