Stock Market's Bounce Could Prove 'ephemeral,' Analyst Says

The stock market's sharp bounce in the stock market on Tuesday isn't enough to convince all on Wall Street that Monday's selloff was a washout that marked the bottom. The Dow Jones Industrial Average surged 403 points in morning trade, after dropping 588 points on Monday, and 1477 points over the past three sessions. Dennis Gartman, publisher of the Gartman Letter, said that while it is "reasonable and wise" to expect a bounce, he believes the bounce will be "ephemeral," allowing those who are long and trapped in bullish positions an opportunity to reduce exposure. He believes many will be "forced" to sell by margin requirements. Gail Dudack, chief investment strategist at Dudack Research Group, a division of New York brokerage Wellington Shields, said what's most noteworthy about a panic day like Monday, isn't the rebound that follows, but the the tendency of closing low to be tested in the subsequent five to 10 sessions. The reason Dudack remains cautious about the result of that coming test, is signs suggesting more margin calls could still be triggered by the recent steep drop in commodity and global stock prices, which could force further selling.