After a very ugly start the markets recovered quite nicely, but it was mainly a dollar-driven, dead-cat bounce. Market players remain intently focused on the U.S. dollar, and since it's jumping around so much it makes for unconvincing buying. There is no reason to believe that the dollar rally is over, and it's going to add a big dose of uncertainty to a market that doesn't seem to care about anything else.
The bounce put the major indices back into the middle of a trading range. According to the technicians, the 1,329 level of the S&P 500 is a key underlying support. As long as it holds there, it will be alright. We came within a few points of testing it this morning, but the bounce kicked in and took us out of the danger level. Upside resistance for the S&P 500 is Tuesday's high of 1,359. If it regains that level, look for a short squeeze and some scrambling by underinvested bulls.