A "Base" Is Being Built, But Watch Out For Fed-Related Volatility Tomorrow.....

The bulls finally got things running, and when we didn't pull back like we have done so often, the "I'll never be able to buy again" panic buying kicked in. We went out at the highs on some huge percentage moves. Volume could have been higher, and Nasdaq breadth was a surprisingly sedate 2 to 1 advancers, but when you move this big, you can't dismiss it too easily.

Technically, we finally have very good conditions for putting in a solid low that will support some further upside. We have a little double-bottom pattern, and now, with a little backing and filling, we could actually start to build a decent base.

We still have way too much volatility. This market is all about macro news and moves, and it is impossible to focus on individual stock-picking. The market has been moving pretty much as a single monolith, and all you have been able to do is daytrade the swings.

I'm hopeful that maybe we will now hold the lows and finally have the chance to try some position trading. The intraday volatility makes for some great intraday trading, but it's not supportive of building individual positions.

Keep in mind that this is typical bear market action. You don't get huge days like this in a bull market. That doesn't mean we won't have more upside -- in fact, I think we will -- but it is going to take a lot more work before we can declare a major change in market character.

Days like this can be frustrating, because if you have been defensively postured, you will underperform. That is the price we pay for outperforming all the way down, and you still have plenty of flexibility to make some moves.

Tomorrow we have the Fed interest rate decision, which should give us some more volatility, but at least for now the mood has shifted, and the bulls have an edge.