Pros Say: Bear Market Rallies = New Reality

Lousy sales, weak earnings and more layoffs reigned over Thursday, with glum news from Nokia, Viacom, Merck, AT&T, DuPont, Credit Suisse and retailers across the board. European central banks including Sweden, the ECB and Bank of England enacted big rate cuts. And as the Big 3 continue to plead for a bailout, Fed Chairman Ben Bernanke urged more government efforts to stanch soaring home foreclosures. But CNBC heard from experts who say that while the news will get worse through 2009, markets will periodically rally — and one strategist sees the Dow at 12,000 in 2010.

Bear Market Rally Is The Pattern Now

Leo Grohowski of BNY Mellon Wealth Management said the market has shown this week that it is able to advance in the face of bad news — which is good, because there's plenty more bad news to come. He said a pattern of two steps forward, one step back appears to have been set up.

Contrary View: The 'Centipede Market'

Dave Bahoric of Trade the News is suspicious of recent gains in the markets, and wouldn't be surprised by more tests of the lows. Money is being thrown at the markets, trading has been very thin. He said one sign of the huge changes to the system is that Goldman Sachs (NYSE: GS) has gone into the online-banking business.

Short-Term Fixes = Long-Term Inflation?

Bianco Research's Jim Bianco said we don't have markets now; we have commercial paper financed directly by the Fed and Libor that's being set by banks getting capital injection from the government — and President-elect Obama intends for the government to do even more. Bianco said severe inflation is likely, as the challenge will be to get private capital involved again.

Options Traders Bet on Airline Boom

Airline stocks climbed again Thursday, as oil prices drop for the fifth straight day. OptionMonster co-founder Jon Najarian said that options traders are betting that one particular stock will go even higher.

Dow At 12,000?! (You Read Correctly)

Clem Chambers, CEO of ADVFN, said he expects stocks to begin a rebound that'll continue for 18 months. The rally will start in January and take the Dow back to the 11,000-12,000 level, he told CNBC. And he offered some investment ideas.

CNBC's Companies in the News:

Ford Motor (NYSE: F), General Motors (NYSE: GM)
(Will the Big 3 Survive?)

Nokia (NYSE: NOK)
('09 Handset Market Down 5%...or More)

(12,000 Job Cuts, Spending Slashed)

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