Alec Harrison stands outside the NASDAQ Marketsite
Dell Computer, tech bellwether of bellwethers, announced Wednesday night that it didn't have much idea of what was going to happen for the rest of the year, but that its revenue and profit numbers for the first quarter wouldn't be any worse than it had predicted.
Wouldn't be any worse? O happy day! Throw in some Street-beating numbers from Alcoa (for the Dow) and some bullish chatter — by analysts on Yahoo and eBay, and by Fed governors about the U.S.' chances of dodging a recession — and the market party was on. Both the Dow and the NASDAQ shot up early and stayed up late, and by day's end the industrials and techs had notched gains of 402 and 146, respectively. (That's 8.9 percent for the currently microscopic NASDAQ, by the way, its third-biggest percentage gain ever.)
And the murmurs of "bottom" are audible again.
Now, traders will tell you that the distinguishing characteristic of a true bottom is sort of like a watched pot: When market-watchers yell "bottom" every time they get a day's rally, it breeds the kind of fleeting, knee-jerk optimism that keeps a real bottom from ever settling in. A real bottom is a thing of unabated pessimism and unapologetic capitulation, in which everybody jumps out the window and waits more than one hot minute before reentering the building and getting in the elevator.
Maybe that happened Tuesday; maybe Wednesday was the breather. And maybe Thursday, a steadily robust rally from the opening bell to the closing one (even if volume wasn't as high as some analysts wanted to see), was the beginning of a long-awaited turnaround. Heck, maybe a year from now you'll be kicking yourself for not buying Lucent on Wednesday when bankruptcy rumors knocked that stock down to what, five bucks?
And maybe not. The economy may indeed have skirted that recession — look at Friday's unemployment numbers for the latest clue — and tech toughs like Cisco, at $15, may indeed be underpriced. Certainly, the bulls' Holy Grail these days is that someday soon, there'll be no earnings disappointments left to deepen Wall Street's funk — and Dell filled that role on Wednesday.
But is being accurately glum about the quarter just past a fundamental reason to be optimistic about the future? Hardly. Sentiment — the way traders make themselves important is by having very thin skins — is certainly on the upswing after a day like Thursday. Tech stocks, you may recall, have a habit of taking back what they've given, especially when it was given in a hurry.
In other words, we may see Wednesday's "bottom" again real soon.