It's a "dead-cat bounce." Markets don't move in a straight line for too long, generally, without counter rallies. The person making the best call on this market is Bob Brinker (AM radio show for 15 years). He put the market dips of the last 4-5 years in the right perspective each time and then for the first time since I can remember he told people to move to 60% cash (in late January). He was about 2 months early, but after the last several years of strong double-digit gains, being only two months early is incredible. So there was the steep Nasdaq decline in mid-March with a major volume decline in mid-April. When the next panic selling occurred in mid-May but on significantly lower volume he told people (on his AM talk show) this was a great point to buy the QQQ (Nasdaq 100) on a trading basis, something I've never heard him recommend. He predicted at that time (I *heard* it) that the market would be strong into mid-July or even into August and the QQQ should break 100 (from an entry point of about 74). He analyzes the market by the market internals: new highs/new lows, volume, advancing issues/declining issues, etc. and watches closely the biggest predictor: interest rates. He says we are in a bear market for now. (a famous investor once said: "I made most of my money by selling too early")
[Hope this is at least one useful answer ---steve Grube]
Brett Knowlton wrote:
>
> So, if the internet and .com bubble has now burst, why is the NASDAQ flying
> high again? Is this the "after-bubble?" I looked at the close today and
> the NASDAQ is up over 4200, something like 16% off its high. A hefty
> decline, but much better than the 35-40% drop from a few weeks back.
> What's driving the new rally? Are Harry Potter sales carrying the market
> now, or what?
>
> Inquiring minds want to know.
>
> Brett