After drifting lower for much of the day and hitting intraday lows at around 2:30 p.m. EDT, major averages exploded higher in the session's final 90 minutes, finishing with solid gains.
The Dow Jones Industrial Average closed up 2.2% to 8456.15 after having traded as low as 8214.62. The S&P 500 ended up 2% to 876.77 vs. an intraday low of 854.19 while the Nasdaq Composite gained 1.7% to 1280.90 after having traded as low as 1243.49 Experience has taught me it's unwise to make too much about any one session and I'm not trying to make too much about this one. But it's interesting to try to put the pieces together -- and it happens to be my job. Among the reasons cited for today's wicked reversal included:| Dow Runs Up the Stairs |
Gold in Them Thar Hills
The "black helicopter" crowd also has to explain how gold rallied sharply in concert with stock proxies. The price of gold rose $8.80, or 2.9% to $316.10 per ounce in New York today and the Philadelphia Stock Exchange Gold & Silver Index climbed 1.9%. Gold rallying strongly in concert with equities is rare of late, but gold and the dollar moving in opposite direction is not unusual. The dollar retreated after yesterday's big gains with the Dollar Index sliding 0.85 to 108.14. Amaury Debarros Conti, gold equity trader for US Global Investor in San Antonio, Texas, suggested today's gold rally was due to a combination of the dollar's setback and comments from Newmont Mining (NEM), which said it will continue to reduce its hedging positions amid evidence of declining worldwide gold production. (Newmont posted second-quarter earnings of 16 cents per share, reversing a loss of 17 cents per share a year ago; its shares rose 2.6%.) US Global, which is long Newmont, remains optimistic about gold because of the outlook for declining mine production and reduced hedging by producers, Debarros Conti said. Newmont's comments reflect that theme and prompted "hedge funds and other producers to hedge stop losses and get things moving." Additionally, speculation the Fed may ease again is also helping gold as inflation "may get its head above water in 2003," if the central bank gets even more accommodative, the trader said.The Search for Meaning
As mentioned above, it's wrong to overanalyze any one (or two) sessions but the market's recent dramatic swings -- day to day and intraday -- are certainly the subject of much discussion. The bears, of course, contend this kind of volatility is not the sign of a "healthy" market and that it portends more steep losses. Bulls counter that this is all part of the bottoming process. "All rallies must start somewhere, and although the NYSE bullish percentage remains on defense, the pieces continue to fall into place for something much better than a vicious one-day bear market rally," emailed Keven Depew, a technical analyst at Dorsey Wright & Associates. (The bullish percentage indicator was created by A.W. Cohen in 1955 and is calculated by dividing the number of stocks trading with new point-and-figure "buy" signals by the total listed on a given exchange. Point-and-figure charts are pure price charts that plot supply and demand for a given stock or index, without factoring in time or volume.) Depew noted the NYSE bullish percentage actually fell yesterday and rose only marginally today. Why? Because "a lot of broken stocks [are] rallying to resistance, but [are] not giving new buy signals," he said. "True risk/reward has improved dramatically from the end of April, but we're still on defense officially," Depew explained. "That's the value of this [bullish percentage] indicator: It doesn't speak often. But when it does it's important." Still, many investors are willing -- even eager -- to take the risk and get in early, despite the market's conflicting signals, which today's session did little to clarify.>To order reprints of this article, click here: ReprintsTheStreet Premium Services For Personal Service: 877-471-2967
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| Dow Jones | S&P 500 | NASDAQ | 10-Year Note | |
|---|---|---|---|---|
| 12,801.23 | 1,342.64 | 2,903.88 | 19.69 |
Oil *
117.67
|
|
DOWN
89.23 |
DOWN
9.31 |
DOWN
23.35 |
DOWN
0.78 |
10 Yr
1.97%
SPDR Gold
167.14
|
|
-0.69%
|
-0.69%
|
-0.80%
|
-3.81%
|
Data delayed 20 minutes |

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