The old saying is that the best bounces occur in poor markets. We have a great example of that today, as a collective sigh of relief occurs on the first good bout of buying in the new year. Breadth is approaching 5 to 1 positive and precious metals is the only sector not doing much.
The big question now is whether the flippers and bears sell into this strength and cause it to quickly falter, or if there will be a supply of buyers worried they will be left out of as the market runs back up.
V-shaped moves and chasing has been the tendency the last few years, but as I wrote yesterday, this isn't your Mama's market. Conditions have changed and the character of the market has undergone a transformation.
One big difference is that many strategists are suggesting that the prudent move is to sell into strength. I don't see anyone predicting that this correction has run its course. That might be a contrary indicator but I think it is more likely to be self-fulfilling to a degree. There are still plenty of folks with long exposure and they are likely to be looking for some exits into strength.
I've done some flipping into this strength of ProShares Ultra QQQ (QLD), which was my index vehicle but I'm inclined to look for another quick upside play after things cool off. Rovi (ROVI), which I've mentioned before, is one of the better charts I see and I also like the looks of Orbcomm (ORBC).
I do not trust this market very much but I am operating with a bullish bias at the moment. I'll be raising more cash as the opportunity arises.