Schaeffer's Analysis

Bernie Schaeffer,Chairman of Schaeffer's Investment Research,has been analyzing the recent rally.The rally is based on a very powerful oversold buy signal,Mr.Schaeffer said.Typically,this goes much further than a bear market rally.Hedge funds are moving away from deleveraging and starting to get involved here.Bonds are also very oversold,in Mr.Schaeffer's view.

Good Signs

Peter Cook of Performance Trust Capital Partners sees good signs in the economy.The low gas prices are a 2-3% consumer stimulus,on top of a record pace in refinancing.In 2002-2003,there was a giant refinancing boom at the end of a bear market.Today we are making fewer houses and cars than the demand rate.This is what you see at the end of a cycle,Mr.Cook indicated.

About Bear Markets

According to Carter Worth of Oppenheimer,bear markets have two phases:1.capitulation,and 2.apathy(healing).We are still in the first phase,since the markets are in the process of finding a bottom.The volatility we are seeing is unprecedented.Mr. Worth likes airlines,biotech and regional banks.