A Plethora Of Factors

June 26, 2002
Dave Landry

On Wednesday, the Nasdaq gapped lower on the Wordcom

debacle du jour. However, it quickly found its low and began to rally. Then,
after drifting lower throughout mid-day, it resumed its rally. This action has
it closing well.

The S&P also reversed after trading sharply lower.

So what do we do? There are a plethora of factors that
suggest the market is now in bounce mode. These include: recent buy signals, the
severely oversold nature of the market, the fact that the post 09/11 lows held,
a reversal in the VIX after hitting relative highs (see below) and a news
reversal. However, this doesn’t mean that you should bottom fish in individual
issues. If you feel you must play this bounce, then stick to the index shares.
And if you do (what movie was that?), make sure you have a chair ready for
when the music stops, since the big blue arrows are still pointing lower.