<<<DAVID CALLAWAY Top 10 reasons bear market is overBy David Callaway, CBS.MarketWatch.com Last Update: 2:00 AM ET Apr 19, 2001
SAN FRANCISCO (CBS.MW) -- Forget the comparisons to the Great Depression. FRONT PAGE NEWSMicrosoft tops earnings, revenue estimatesQuarterly reports grab buyer's attentionNasdaq soars; Dow also flourishesTop 10 reasons the bear market is over Pull down the effigy of Alan Greenspan hanging from your ceiling.
Rip up your first-quarter mutual fund statement.
The dance music has started again.
Calling market bottoms is almost impossible to do, and not even worth trying for long-term shareholders. But the gains we've seen in the last two weeks -- in the face of a continuing flood of lousy news -- show that we've entered a new phase in this market.
No, it won't go straight up from here. It could take years for the Nasdaq to get back above 5,000 again. But the psychology has shifted. Of that there is no doubt. With apologies to David Letterman, here are the top 10 reasons the bear market is over.
10. Abby Joseph Cohen has risen from the dead. After months of obscurity, the Goldman Sachs strategist is back in the headlines, picking index targets. Ironically, Cohen is now pulling back her estimates of where the market will go this year. But even then, the unrepentant bull is still expecting a 30 percent gain in the S&P 500 ( SPX: news, msgs, alerts) .
9. Charles Schwab is telling investors to relax. Have you seen those irritating commercials where the old boy tells a bunch of nervous investors to chill out? What he really means is 'Please don't bail on us.' History will show that the exact moment the market bottomed coincided with the first airing of this commercial. Schwab (SCH: news, msgs, alerts) shares soared almost 16 percent Wednesday, and not on the hopes that investors will relax.
8. Greenspan has outlawed layoffs. The nerve of all those companies slashing their payrolls when he told them all along that the economy isn't heading for a recession. If the Fed's comments after its rate cut sent one signal, it was that dire predictions of a slow second half were forcing companies to cut too deeply into their workforces.
7. The Dow is up more than 1,500 points since its intra-day low of 9106.54 on March 22. The Nasdaq is up more than 400 points since its low of 1614.58 on April 4, or 25 percent. When markets turn, they generally turn quickly. There are still plenty of short-sellers out there. But for the indexes to retest their lows at this stage would take an economic disaster that is now nowhere on the radar screen.
6. No one can remember what a whisper number is. That's a good thing.
5. Chip stocks are back. The sector has gained almost 50 percent in the last few weeks. Intel (INTC: news, msgs, alerts) was up 20 percent on Wednesday alone. The group is still way below its highs. But these gains prove that technology is far from dead.
4. Earnings surprises are starting to turn positive. There will be more warnings, but most of the bad news is out. Look for performance outlooks in the second quarter, and especially the third quarter, to start to improve big time. Sung Won Sohn, chief economist at Wells Fargo, told CBS.MarketWatch.com that he thinks the old economy stocks - like the automakers - will be the ones to lead us out of this economic slump. Someone has to.
3. The wall of cash theory. There's some $2 trillion in cash languishing in money market mutual funds right now. Wednesday was one of the biggest trading volume days in Wall Street history. The big money is moving in.
2. Trust Big Blue. IBM (IBM: news, msgs, alerts) had every chance to stop this rally dead in its tracks with its after-hours earnings report Wednesday. When this company sneezes, the market reacts. But the technology giant came through with flying colors, matching estimates on higher-than-expected revenue. What economic downturn?
1. If you liked the latest rate cut, wait till you see what the Fed has in store for next month.