In This Issue:
Reasons For Cautious Optimism Continue To Appear
Many Promising Stocks Attract Long-Term Investors
The Bottom Line This Week
stock market continued to lose ground last week as the Dow and the Nasdaq
declined an additional 2.5% and 3.4% respectively.
growing number of analysts believe the stock slide will continue until the
market tests (reaches) the low point it made on November 20. If so, it will be
a classic correction to a bear market rally.
much bigger issue is what will come next if the November lows are reached.
Pessimists believe the market will continue to decline until blue chip P/E
ratios get closer to 10. If so, the S&P 500 would drop from today's 832 to
750, or so. Super bears think the index might fall another hundred points.
the other hand, optimists believe the market will bounce back in a classic
stage two bear market rebound. If history repeats, the second time should be
the charm as a new rally would typically test its former highs – and then
continue up. The 298 point jump the market took during the first three days of
this week suggests that the optimists may be right.