We finally had the highly anticipated oversold bounce and, as usual when we have these sudden spikes higher after a steady downtrend, there are celebrations and declarations of clear sailing ahead.
The catalysts for the move today were an internal memo at Citigroup (C - commentary - Cramer's Take) of profits for January and February, talk that the mark-to-market accounting rules may be tinkered with and announcements by a couple politicians that the uptick rule, making shorting more difficult, is close to being re-imposed.
It certainly was a positive day for the bulls, but it MAY be nothing more than a potentially good start to a bear market rally. We have seen these sorts of spikes numerous times over the past year and they have all fizzled out -- some faster than others.
The key now is to keep an open mind and see if this can develop into something more. Will real buyers be sucked into this, or will it just be the folks who change their mind every day who become overly excited and will be whipsawed and disappointed when we don't go straight back up?
So far what we have is an oversold bounce on good breadth and better-than-average volume. It certainly is good news and an improvement over recent action, but it doesn't warrant a major celebration (yet).
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