Market players hoped and prayed all week for a bounce, yet they had nothing to show for it except more losses. Finally, this morning, vague comments from members of Congress about a productive fiscal-cliff meeting brought in enough buying to keep the market in positive territory. Apple (AAPL) reversed big intraday, breadth was positive -- especially on the NYSE at 2275 gainers to 790 decliners -- and the market even managed to close near the highs. There was a little nervousness mid-afternoon, but the bulls found their footing and appear ready to build on today's reversal.
What was most interesting about this week's action was that everyone was convinced a bounce was coming. The overly anticipatory bulls were burned badly when they jumped in too quickly, but given how stretched the market was to the downside, it just needed the right news to trigger a reversal.
While I'm optimistic that the market has the potential to bounce a bit further, I see no reason to believe that it has made a lasting low. In fact, sellers and bears are very likely to make another run as the market bounces into overhead resistance.
The bulls are going to be hoping for another one of those magic V-shaped bounces, but without the power of Ben Bernanke and his endless QE, we are likely to see more normal back-and-forth trading rather than a one-way trip straight up.
If the market can gain some confidence that a fiscal cliff resolution really is likely, we have a good chance of a recovery into the end of the year. On the other hand, all we have is one day of better action. It is far too early to be a raging bull.
Have a great weekend. I'll be working on my shopping list of stocks and trying to get a jump on holiday plans. I'll see you on Monday.