After a big spike up on Monday, we have been battling back and forth the rest of the week and haven't made any further progress. That isn't a negative. We need the market to rest as short-termers exit and stronger buyers emerge. Big institutional buyers generally prefer to buy pullbacks rather than chase strength, and they will provide underlying support if they really are going to start going to work and deploy new capital.
Not complaining, but this market has not been an easy one. We have been highly news-driven with new bailouts and banking schemes on an almost daily basis. To add to the complexity, the final hour of trading has consistently seen crazy volatility. It doesn't much matter what happens the rest of the day as the whipsaws in the last hour will undo any logic that may have existed.
Nonetheless, a bounce off the March low and some churning over the past four days is constructive action. Many feel we have held up artificially due to end-of-the-quarter window-dressing and performance-anxiety. Even if that is so, we can afford to give back a chunk of the recent advance without completely killing the potential for a further bear market advance.
With earnings season on the horizon and plenty of economic news next week, you can be sure we are going to see some more choppy action. The chartists out there are starting to see better chart formations, so according to them it's a good time to work on those watch lists.