They've Got... Rabbititis

SAN FRANCISCO -- There is an epidemic afoot on Wall Street. Every day, people just can't seem to help themselves from calling a bottom. There was another outbreak midday Wednesday, when the

Nasdaq Composite

rallied from a low just above 3100 to 3258 by 2 p.m.

"Today's resiliency is a classic reversal -- the completion of capitulation," Charles Payne, president and chief analyst at

Wall Street Strategies

, wrote in an afternoon email to clients.

Even

Prime Charter

chief equity strategist Scott Bleier, who just

Friday said bottom calling is a fool's paradise (H.I.), made a bottom call late Wednesday morning.

"This is it," he said.

Elsewhere, Brian Belski, fundamental market strategist at

U.S. Bancorp Piper Jaffray

in Minneapolis, said he was seeing "signs of a market drawing out a bottom."

Belski, who fared well in the mid-August

predictions piece, was in town for some meetings. He uttered the aforementioned utterances during our informal get-together after the close, which saw the Comp down 2.2% at 3168, the

Dow Jones Industrial Average

off 1.1% and the

S&P 500

down 1.6%.

Bleier and Payne, meanwhile, amended their calls in the wake of the market's latest afternoon struggles.

Bleier recalled (accurately, I will add) that he's long believed the bottom will not be V-shaped this time. He stuck to a belief that signs of a bottom are in place, but conceded he's not 100% sure.

Payne, meanwhile, did a near 180-degree turn -- not unusual for someone I've always considered more a proxy for the daytrading community than a traditional strategist.

"I saw some great things during the session," Payne said, noting big intraday reversals on higher-than-average volume on stocks such as

Power-One

(PWER)

,

Tollgrade Communications

(TLGD)

,

Veritas

(VRTS) - Get Report

, and

StorageNetworks

(STOR) - Get Report

.

But Payne lamented not only the Comp's failure to secure a "classic reversal" but also its inability to hold 3200. Barring a goal-line stand here, the swoon Wednesday afternoon suggests 2800 is the next downside target for the index, he said.

And the Winner Is

I'm certain Bleier, Belski and Payne weren't the only ones talking bottom Wednesday, and the very fact so many people continue to make those pronouncements means "we're not even close to a bottom," according to Bob Brinker, editor and publisher of

Bob Brinker's Marketimer

and host of

ABC Radio's

"MoneyTalk." (Check out

www.bobbrinker.com

for more information.)

"When we get to a bottom, nobody will be saying 'Let's buy' because the spirit will have been drained from the Nasdaq monster," he said.

But those "animal spirits" are alive and well, Brinker said, noting

Applied Micro Circuits

(AMCC)

rose as much as 5% in after-hours activity; the chipmaker produced better-than-expected earnings and revenue, and set a 2-for-1 (remember those?) stock split.

The financial press has a habit of overlooking Brinker, the overwhelming winner to

last night's request for alternative suggestions for "Guru of the Year" (thanks to all the emailers). Maybe it's because he's in Henderson, Nev., and the antithesis of a media hound, but -- for whatever reasons -- this isn't the first time he's been neglected by the Fourth Estate. Back in 1998, readers selected him as the top

Unsung Hero for calling the bottom in October that year.

In January, Brinker said he revised a 10-year recommendation that investors be 100% in equities, suggesting they reduce equity allocation to 40% from 100% and raise cash to 60% from zero.

Brinker's proprietary (of course) market-timing model has remained bearish since January, save for brief trading rally recommendations. In his show which aired May 27-28, he recommended buying the

Nasdaq 100 Trust

(QQQ) - Get Report

(a call that caught the attention of a noted trader). The QQQs closed at 77 3/4 the Friday before the recommendation was made on his weekend radio show. Brinker later suggested the QQQs would reach $100, which they did on July 17. The QQQs declined thereafter and on July 29-30 he recommended investors take profits at 84. They have since rallied back to as high as $103 33/64 on Sept. 1, but closed at $77 1/16 on Wednesday.

Nothing that occurred Wednesday (or any other day of late) has Brinker rethinking his view that we've entered a true, honest-to-Pete bear market. The market watcher believes the bear will not abate until 2001 at the earliest, and not until it has extracted declines in excess of 20% from the Dow, S&P and

Wilshire 5000

from their respective tops, and up to 70% for the Comp from its apex.

Think those kind of losses are crazy or absolutely impossible to contemplate?

Well, that's because you're in what Brinker calls the "denial phase" (which features ridicule of those who are bearish), the first of three psychological stages of a bear market. The newsletter writer sees most market participants as having already gone through denial and now in the "anxiety stage," when they realize the downturn isn't going to suddenly evaporate.

At least, they should be anxious, given the Comp is now seven months into a decline that has shaved over 37% from its peak.

The "capitulation stage" follows anxiety and occurs when people "throw in the towel and say 'get me out at any price. I'm never going to invest in the stock market again'," Brinker said.

The very fact that you're reading this and I'm getting paid to write it should be a clue that we've yet to enter that kind of environment; Brinker offered another.

Back in May, the market watcher estimated the theoretical price-to-earnings ratio for the 20 largest stocks

with positive earnings

in the

Nasdaq 100

was a whopping 182 times estimated 2000 results and 134 times estimated 2001 results.

This month, the newsletter calculated that the P/E for the 30 largest -- and presumably not the fastest-growing -- companies in the NDX was still a hefty 96 times 2001 estimates.

"We are nowhere near a final bottom. It's not even on the radar screen," Brinker concluded after reviewing the figures. "Anyone who thinks we're going to have a happy ending is not realistic."

Am I getting through to you, Alva?

P.S.: Bonus points for naming that cinematic reference.

As originally posted, this story contained an error. Please see

Corrections and Clarifications.

Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

Aaron L. Task.