Dead Cat Bounce?

Wall Street traders like to give names to everything, and this week, the phrase has been "dead cat bounce". As the saying goes, even a dead cat bounces when it hits the pavement. It is a reference to a phenomenon that as stocks tank, there are times that there will be a quick revival upward before a continued drop.

The past month, the Dow Jones Industrial Average is up 17.5% (including today's decline). Some would suggest that this week's decline is continued fall of the last 3 week's of the cat bouncing.

I disagree.

Unlike other situations, there are good fundamental reasons for a general uptrend. First off, the unemployment rate is still rising, but it is getting to a high point where it becomes difficult to understand where new job cuts will come from.

Second, the Financial Accounting Standards Board (FASB) passed new rules relating to how impaired assets are reflected on bank balance sheets and especially at valuing assets that currently only have "distressed transaction" prices. This I believe will improve bank balance sheets.

Third, the general market feeling is of awakening rather than fear.