Stocks Have a Too-Exclusive Party

This was not, repeat not, the end of the bear. Bold investors came back from the holiday weekend soothed and hungry for bargains, ratcheting up the Dow by 228 points and the NASDAQ by a glorious and record-setting 254 points, or 7.9 percent. Even Microsoft went up, two days before Judge Jackson's gavel (or, more precisely, cleaver) falls. But trading volume, as it has been through much of the tech sector's spectacular six-week doldrums, was light Tuesday — meaning the timid money is still staying home. And in the markets, fear, just like exuberance, tends to be a self-fulfilling prophesy.

"We may have entered a genuine bear market, the kind that takes six or nine months to hit bottom, and marked by periodic 'sucker's rallies,'" says TIME Wall Street columnist Daniel Kadlec. In that scenario, of course, Tuesday would be one of those. The other one: This is merely a period of great fear and confusion. After watching NASDAQ shed 40 percent in six weeks, investors are once bitten (and how!) and twice shy, a feeling which is murder on amateurs — and online trading outfits — but which pros can shake off if they get a sign that something's changing. "When the Fed is thought to be through raising rates, market psychology and participation could improve," says Kadlec.

But there was no good news in the economic tea leaves for Greenspan and the boys Tuesday, as consumer confidence surged a surprising seven points to 144.4 in May, the highest level since January, hardly a sign that the economy is slowing. What happened Tuesday was some big bottom feeding by relatively few players, which translated into gaudy hikes in the indexes but provided little reason to believe the bear is headed back to his lair. Some gutsy players may have given Bruin a bit of a jolt, but these guys are as likely to take their profits in the morning as spur the kind of long, steady recovery that will have America buying and holding again.