Stock Market Commentary for Wednesday, April 20, 2005

Nasdaq's barely-sharp 19.44-point gain on Tuesday was certainly a welcome relief, but it's also very typical to see sharp rallies within the first two days after a new low. They're called "dead-cat bounces" and consist mostly of short-covering rather than true buying. We need to wait at least another two days before we can begin to look for confirmation that the recent sell-off really is over or was just pausing before resuming its decline.

It's rather interesting that the rally coincided with a sharp rally in commodities, possible lending credence to my suspicion that stocks were being shorted with hot money that came from the recent sell-off in commodities.

Nasdaq trading volume was moderate (1.89 billion shares), and breadth was strongly positive, with 2.34 gainers for each loser. The meager trading volume means that this was not a strong rally.

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-- Jack Krupansky