A decent oversold bounce finally kicked in today, but volume was very light and there was another selloff in the final hour of trading. That shows a lack of conviction on the part of the bulls and has to have you thinking about how quickly this bounce could fizzle.
The point gains were quite good and breadth was solid with about four gainers for each loser. Overall, it was a run-of-the-mill bounce but I don't want to be too quick to look for it to fail. I'm going to give the bulls a little more room to prove themselves, but I see no reason to believe that our downtrend has come to an end.
This is exactly the sort of weak bounce you'd expect to see in the middle of a downtrend. It's strong enough to suck in some of the folks who tend to always be bullish, and it attracts some traders, who are looking to knock out some quick gains. But, overall, there are no signs of a major change in market character.
We'll see if the bulls can build on this. I wouldn't be surprised to see some more upside in the near term but I'm not expecting much.
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