Born-Again Bulls
-- June 16, 2003

The New York Federal Reserve released a report showing that business is picking up for manufacturers in the New York area. Investors took this opportunity to bid up stocks -- sending the S&P; 500 Index above 1,000 for the first time in over a year.

But today's good news comes on the heels of Friday's bad news on the consumer front. Put simply, there is no clear indication the overall economy is improving. Yet despite these mixed messages, investors keep rushing in.

So what's behind this rally? Investors are worried that they'll be left behind. After all, stocks, as measured by the S&P; 500, have climbed over 26% over the last three months. And that type of move creates a powerful incentive to join in.

But beware. This is exactly how bear market rallies trap investors. They are powerful and attractive, but they also lure investors in and snap shut exactly when most investors least expect it.

related article: Stocks Rally To Highest Levels In A Year