Friday's Big Bounce: Dead Cat or Second Wind?

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Well, the bounce held for a day. After a we-oversold-yesterday bull session that almost none of the Street's pundits was willing to declare the end of the slide, the lately ailing indexes were all in the black, with NASDAQ soaring a fabulous 241 points (almost 8 percent, the second best of all time) and the Dow regaining 157 of its 379-point Thursday plummet. It was the right sort of rally, steady and uninterrupted, and it's sure tempting to look at the previous sessions' new lows — 3074 for the NASDAQ and 10,034 for the Dow — as the floor we've been looking for.

Practically every chipmaker, computer maker and network outfit you could name — except Microsoft, which hit a 52-week low on some foul earnings rumors — was movin' on up after Gateway, PMC Sierra, and Juniper Networks all posted reassuring earnings in a day full of happy news. (Even Abby Joseph Cohen, Wall Street's kindly aunt, pitched in with a declaration that the S&P 500 is 15 percent undervalued.)

But have the bruised, bloody indexes had enough? On the tech side, some technical signs have been encouraging, like the high volatility that accompanied the week's woes. That's supposedly a sign that the bounce wasn't just a knee-jerk buyback. And traders have been pointing to 3250 as a key level to clear. Today's close: 3316.

Oil prices have had a lot to do with the slide, and they'll have a lot to do with whether this bounce lasts. Friday, traders may have figured out that the explosion on the U.S. Navy ship wasn't one of Saddam's Scuds, and that neither Israel nor the Palestinians produce a drop of oil. And bad news from the region took a day off. So crude prices came down, and optimism went up.

But the uncertainties of oil, interest rates, the Mideast and presidential politics will all be around for at least a few months. The only thing investors can do is ignore them if they choose, and in the NASDAQ that's at least possible as long as those rosy earnings reports keep coming. (Heck, Gateway even said European sales were dandy.) One big session makes a bounce. Two big sessions make the beginnings of a rally. A bona fide second wind for the 10-year bull market? We'll let you know in December.