Bounceback

On the surface, the big gain and breadth of better than 10 gainers for every decliner was quite impressive, but if you dig a bit deeper it wasn't that fantastic. The biggest problem: Volume was substantially lower than during the selloff on Thursday and Friday. The buying wasn't nearly as aggressive as the selling last week.

The other big problem is that the bounce today, although substantial, didn't even move most stocks back to where they were last Wednesday. The charts are still broken, and there is plenty of overhead resistance nearby. If we had bigger volume and gained some momentum during the day, it would be different, but after a bit of a squeeze into the finish, we ended up closing a little above where we opened.

Some of the big-cap technology names gained strength during the day, but overall the average stock did little after the gap-up this morning.

Low-volume bounces to resistance levels is one of those technical considerations that have been completely ignored by this market for more than a year. Every rally we have seen has come on declining volume and has completely ignored overhead technical levels. These bounces have made the perma-bulls look like geniuses because no negatives, no matter how obvious, have mattered.

It is certainly possible that today's rally is the start of yet another sharp bounce back up. The recent history of this market is that we just keep on building on moves like this and end up crushing any skeptics who think low volume or overhead resistance matters.

While today was certainly a victory for the bulls, according to some the action lacked vigor and makes them skeptical of our chances for yet another very quick and easy recovery.....