The bears moved to the sidelines in front of President Obama's prime time economic speech to a joint session of Congress. The big question is whether or not there will be something more than a glorified campaign speech. Will there be some specifics about how the bank issue will be handled or some other surprises?
There is no reason for the bears to take the risk, so they covered and got out of the way. Typically, we can build a bit on a reversal like this, but as been the case lately, we are trading on news headlines and politics more than anything to do with stocks.
The market certainly was stretched sufficiently to the downside to support a decent bounce, but keep in mind that all we've done at this point is little more than recoup yesterday's losses. The big technical picture has not changed at all. We can certainly see more upside if the news flow is handled better by the Obama administration, but there are going to be plenty of critics of any plan that is announced, and sellers and shorts are going to be ready to reload.
What we have going is a classic oversold bounce in a bear market. I wouldn't be overly trusting. Tomorrow is promising to be another day of drama with the news that is about to hit.