A BOUNCE OR A BOTTOM? Whether last week’s V bottom turns out to be the end of a short bear market or just a temporary bounce in the beginning of an extended bear market obviously depends on the economy. Past short bear markets have forecast some recessions which never came true. So we wait on the economy. But in the meantime, we have some technicals to watch and use as indicators (‘cause waiting for confirmation from the economy generally is way too late). Thus let me refer back to some research offered up by Barry Ziskin in the 1989 annual report for his Z-Seven Fund (symbol ZSEVX). Summing up, Barry looks at numerous market declines and shows that most solid bottoms have a retest of the bottom. One explanatory quote: “Historically, the length of the base-building period helps to predict the expected duration of a subsequent stock market advance.” So V bottoms are too short to propel stocks for too long and for too far. This jives with ‘Trader Vic’’” Sperandeo’s view that we need to see: (1) a market stop going down, (2) a broken trend line, and then (3) a successful retest to confirm his as easy as 1-2-3 reversal of trend. So for now this rally looks like it’s only a bounce even if it lasts a month or longer. As a final synopsis, I see Investor’s Business Daily (IBD) did not ordain yesterday’s big rally as a Day 3 or Day 4 bullish “follow-through” day following last week’s low because trading volume was light. Plus IBD is not seeing many individual stocks making bottoms, another necessary prerequisite in their trend analysis when a good bottom is being set.. So for now I’d say this is a bounce not a bear market bottom.