Have the bears fired their last shot? Today's impressive late-in-the-day turnaround on Wall Street could signal that a more durable rally is in the offing. However, the stock market now has a lot of "proving" to do over the next three or four weeks.

The problem, in a nutshell, is this. In a healthy market, the financial stocks (banks, brokers, insurers, etc.) shouldn't have dropped as precipitously as they've done since around the middle of October.

Yes, it's possible for the rest of the market to plod ahead without the financials, even for a number of months at a time. The financial sector, though, is the nerve center of a capitalist economy. Without normal borrowing and lending, business gradually stagnates.

I'm hopeful that the financials will bounce back sharply over the next month or so, spearheading the stock market's renewed fourth-quarter rally. (As I pointed out in our November issue, the final quarter is typically the strongest of the year for stocks.) But if the financials advance grudgingly, it will be a signal for us to take defensive measures in late December or early in the New Year.

Let's listen carefully and allow the market to tell its own story. Meanwhile, I continue to advise (as on last night's special Hotline) that you focus most of your new money on stocks whose earnings prospects still look strong well into 2008.

Hang on tight, because the white-knuckle ride is almost over! Wall Street has gone through a tough spell lately, with the major stock indexes giving back most of their gains from the rally off the August bottom. But there's a ray of light on the horizon.

What am I talking about? Do I see an imminent end to the housing/mortgage crisis? Nope. Unfortunately, it looks as if we'll have to wrestle with that issue, on and off, for many months to come.

However, the market itself is sending a subtle message that it wants to find a good bottom right in here. There are few guarantees in this business, but my studies lead me to believe that the year-end rally will resume shortly -- with a bang.

Here's what I'm watching. I pay a great deal of attention to the number of NYSE stocks touching new 52-week highs (or lows) each day. Master technician Jerry Appel introduced me to this indicator more than 30 years ago, and I've refined it in various ways myself through the years. Over and over, I've found that the list of new highs and new lows will telegraph the market's true intentions at precisely those crucial moments when the mass media are screaming at you to do the wrong thing: buy at the top or sell at the bottom.

Lately, the NH-NL figures have told an interesting tale. Even though the market has given up most of its post-August gains, we're not seeing nearly so many individual stocks touching new lows as we did in July and August. On August 16, 1132 Big Board stocks hit new lows for the year. So far, during the most recent downswing, the worst reading was 505 last Thursday.

Equally fascinating, even though the Standard & Poors 500 index closed tonight below its level of last Thursday, about 200 fewer NYSE stocks struck new lows today than a week ago. In other words, more and more stocks are finding support (buyers). This is a strong clue that an important bottom is near.

We all know that the financial news right now has a gloomy cast. If you're not outright disgusted with stocks, you're probably somewhat discouraged or perhaps just plain apathetic.

Shake it off! The market loves nothing more than to surprise the majority, and I'm confident that the next big surprise will be on the upside.

It's going to take time, but we're finally crawling out of the pit. Stocks held on remarkably well today, given the huge gains of the previous two sessions (and the ongoing anxiety in the credit markets).

The day began with some weakness in the first hour of trading as nervous profit takers pulled a few chips off the table. Bank stocks, in particular, felt considerable pressure. Soon, however, a steady stream of buyers emerged in the large-cap growth names, and the major indexes ended the session pretty much unchanged.

Don't be surprised if the bears try another raid tomorrow. Regardless, my indicators suggest that we've completed an important intermediate-term bottom -- the kind that normally leads to a rally lasting six to 10 weeks, or even longer.