Taking stock of rally

Stocks are down in early trading - not especially surprising given yesterday's 500-point run-up. The bigger question is whether the recent rally is more than just a rally - that is, whether it marks the end of the bear market, or at least the beginning of the end. Tom Petruno at Money & Co. gathers the evidence on both sides:

The bull case is that every bear has to die, and this one already has done more damage than any other of the post-World War II era. So if we haven't entered a new Great Depression, and enough investors have faith that the economy is bottoming, it would be natural for stock prices to begin to recover -- or at least, stop falling. Art Hogan, chief market analyst at Jefferies & Co. in Boston, believes that investors correctly sense that "the velocity of bad news is slowing." He notes the 5.1% rise in existing home sales in February, albeit from dismally low sales in January.

[CUT]

If we are repeating the 1930s experience, short-term rallies far bigger than the current one could ensue, only to give it all back. Within the 1929-1932 market plunge the Dow index rallied 29% or more on three separate occasions. Investors who are searching for more convincing signs of new bull markets ought to look overseas. The Brazilian market, for example, has been remarkably resilient this year even in the face of Wall Street's meltdown. Brazil's main market index is up 13% since Dec. 31, compared with the 8.9% drop in the S&P 500. In Russia, the Micex stock index has rocketed 37% this year. China's Shanghai composite index is up 29%.