By Thom Calandra, CBS.MarketWatch.com Last Update: 10:36 AM ET July 26, 2002 SAN FRANCISCO (CBS.MW) -- Paul F. Desmond, the market researcher who tracked bear market bottoms and bull market tops back to 1933, sees no indication this week's rally takes investors to the fruitful land of a bull market. "Before (the) rally began, almost all of our short-term indicators, and many of our intermediate trend indicators, were at deeply oversold levels," says Desmond, whose research suggests bear market bottoms are accompanied first by frantic selling, the kind that puts 90 percent or more of all NYSE volume and price action in the red, then by frantic buying. "As of Tuesday's close, the percentage of stocks above their 10-day moving averages stood at 1.9 percent, the lowest level in more than a decade," says Desmond, president of Lowry's Reports. "So, it is not at all surprising that a strong, snap-back rally developed from that deeply oversold condition. And, this rally could easily last for a number of weeks." Still, says Desmond, the stock market has not seen all-out, got-to-dump-these-losers selling since the trading session of April 3, 2001. In 1999 and 2000, there was not a single day in which negative volume on the New York Stock Exchange amounted to 90 percent of the total, with 90 percent of all points gained and lost in the red as well. This week, the Dow's big day did not qualify as a 90 percent upside day, either. Upside volume on Wednesday's big Dow day registered less than 85 percent. Buying surges in a bear market are a sign of demand for stocks. Genuine demand in Desmond's book is marked, once again, by days when volume and price changes are 90 percent or more in the black. A combination of these panicky up and down days have been an ingredient of virtually every bear market bottom since 1933, he says. "Several of the more important indicators that are found only before major market bottoms are still missing -- such as the lack of 90 percent downside days, the minimal number of stocks at new 52-week lows, the still high level of our Average Power Rating Index, and the still high level of the P/E ratio of the S&P 500 components. Based on those factors, we view (the) recovery as a rally within a continuing bear market." Lowry's Reports has been supplying technical research to Wall Street banks and trading desks for more than 60 years. The firm's power rating index is a proprietary measurement of relative strength applied to about 900 individual stocks. "We have been compiling this indicator since 1949, and it has been very helpful in identifying almost every major market bottom since that time," Desmond tells me. "In the present case, although the APR has been dropping rapidly, it is still not down to the levels seen at major bottoms in the past." Read more about Desmond.