Today's action was certainly constructive if not all that impressive. The Qs came down to my cited support at 43.58 with a low of 43.49. Volume was higher across the board. The VIX popped up to a level that before 2008 would be associated with a bottom. The Absolute Breadth index reached a level equal to its high at the March and July 2009 lows. All in all there is good reason to believe that we may have put in a multi-week bottom today.
However, the NYSE index undercut its Feb 10 low, which is a big negative. Also, the fact that the SP500 undercut its May 6 low probably means that at most we could see a retest of the April high this summer for a double top as opposed to meaningful new highs. It's too early to make that call yet. We need to see how the next one to two weeks plays out.
One comparison with the action over the last 4 weeks that stands out is the top in 2000. Although the initial downmove was more severe, the topping action this summer may be similar as most indexes rallied the rest of the summer after the initial low in May. This was followed by a severe selloff that lasted the rest of the year. The reason that I think this comparison may be valid is that it conforms to the pattern of the 10 year cycle. The difference this time I think will be that we rally to new highs in 2011 and 2012 before the final meltdown begins.
In any case markets are severly oversold, and a rally to the 50demas is the minimum objective before more selling is likely, in my opinion. I bought the QLD.