How to Handle a Snap-Back Rally (If We Get One)

October 12, 2008

A stunning week, and thank goodness it’s over! Records were set on the downside with major averages sliding 18% over the course of five tumultuous sessions. Over the course of the last two weeks, we essentially met the definition of "crash" - a more than 20% drop in a short period of time. Selling was relentless all week long with only the Nasdaq Composite managing to close in positive territory by a few points on Friday.

As an indication of how pessimistic investors were this week, you have to realize that this selling took place despite the unprecedented coordinated global rate cut, decent earnings and forward guidance from bellwethers [[IBM]] and [[GE]] and commitments by the U.S. government to backstop commercial paper.

Complete Story »