Nice Today, But Not Getting Too Excited Yet....

We have been struggling for almost two weeks, and we were overdue for a bounce. We finally had one today and even managed a strong finish, but it wasn't as dynamic as many of the recoveries we have seen in the past six months. Recall, however, how last year's market always saw some follow-through after we had a positive day -- we'd just keep going, even though the bounce didn't seem particularly impressive at first.

The fact that we have struggled for a week before we finally managed this bounce today makes me think that this time it may not be so easy for the bulls. Also, the fact that we have no leadership and that there has been much more technical damage this time makes me less inclined to expect an easy recovery. We have to be careful about rushing to proclaim this a failed bounce though.

The bounce today was primarily led by weak dollar plays -- namely, oil, steel and gold -- but they have been slaughtered recently, and the action today doesn't do much to repair the charts. That is the case with many stocks recently. Most of the stocks that led this market last year have corrected far more than the major indices, and a one-day bounce does little to turn the picture positive.

We are at a very interesting juncture here. If the bulls are still in charge like they were most of last year, then they are going to keep things running. If, however, this is just a routine oversold bounce within an emerging downtrend, then we are going to sputter out pretty quickly and the mood is going to get ugly again fast.

It was a good day for the bulls, but it is minor in comparison to the damage that has been done lately and does little to shift the big picture back to positive (so far).......