10/10/08: A Rally For The Ages

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There was absolutely no reason for the market to rally today. At one point the Dow was down 700 points. Investors have watched the decimation of the indexes all week as large cap stock hit 52-week lows, and some, like GM (GM), hit levels that they had not seen in two generations.

The only way to look at what happened is that people got tired of selling. There must have been something that they saw beyond the news of a deep and long recession, predictions of more bank failures, and unemployment which might go above 10%. It was a bit of hope which may kindle something better or a notion which could be beaten to a pulp within a few days.

At the end of the trading the numbers, as close as anyone could count them, were that the Dow ended down 117 points or 1.4% to 8,462. It was an superb comeback. The Nasdaq actually rose a fraction, up .3% to nearly 1,650.

The market may rally to the skies next week or sell to new multi-year lows. But, no one will forget the sharp climb after a dismal open today. It was too unexpected.

Douglas A. McIntyre