Was That a Bottom Down There?

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If this wasn't a bottom, there's something very bouncy down there. Pushed over a cliff by underwhelming earnings reports from components IBM and JP Morgan, the Dow plummeted 435 points to a nostalgic (March '99) level of 9654 before 10 a.m. Big Blue dropped 23 points, Morgan shed 18, the curbs were on, and panic was in the air.

And then, with little provocation except perhaps the shock of a solidly four-digit Dow, folks started buying. By noon, JP Morgan was only down a handful. IBM, well, IBM pretty much stayed down, but was a handful off its lows. And before you knew it, the Dow had stabilized, wavering between 100 and 150 in the red, and then spent the afternoon chugging back toward zero, re-clearing 10,000 along the way. (No milestone celebrations this time, though, and toward the end of the day's trading it was heading back down again.)

The NASDAQ, meanwhile, was a practically a rock in these troubled times. On staggering volume of 2 million shares (this by 2:30), the tech index took a smaller version of the Dow's early dive but steadily regained ground throughout the day and by late afternoon was into the black. Credit Intel, Sun Microsystems (which flubbed and spit out a good earnings report a few hours early) and Microsoft for leading the charge.

What's going on? Maybe just a single-day version of last Friday; investors seem unwilling to dash the indexes on the rocks completely, but equally unwilling to declare the end of six months of neuroses just yet. Earnings season marches on after the bell, with big-footprint techies AOL, Apple and Microsoft all reporting for the after-hours crowd. Their reaction will show up in the morning.

Wall Street's wild day has everybody guessing. One thing seems clear, though: Even if it's a bottom, don't expect the good times to return just yet. With the economic-minded fretting about the winter and spring — Slowdown? Inflation? Both? — and the policy-minded starting to think seriously about the election, every earnings report is a tea leaf and every tumble a bargain hunt. The tentative consensus from the CNBC crowd is that with trading volume running higher on the sell-off than on the recovery, this thing may indeed be a bottom, but it's a bottom to be tested and retested in the next days and weeks, to find out if it's real.