After an ugly close yesterday, another big drop in China, further pressure on oil and weak actions in futures overnight, it looked like we may be heading for some trouble today. Instead, the contrarians had a great day. Better-than-expected consumer sentiment and some solid earnings from sleepy giants like Johnson & Johnson (JNJ) and 3M (MMM) helped the bullish cause.
All the indices other than the DJIA is still down from Friday's close, but the reversal today came on great breadth and made it feel like we really made some upside progress. There was quite a bit of talk today about how the worst is over and maybe, just maybe, even oil may have bottomed.
If we take a step back and look at the big picture, what we have is a breakdown and an oversold bounce. That is it. It isn't anything particularly profound and neither the bulls nor the bears have a clear edge at this point. We could continue to hold support and work higher or we could roll over and retest recent lows. There is no obvious momentum right now, although I am leaning toward a more bearish view.
We have the big Apple (AAPL) earnings report coming up, which will help to set the tone, but then it's the Cirque du Yellen Fed show tomorrow that will grab the attention. Those two events will receive the credit or blame for whatever happens next to this market. (Apple is part of TheStreet's Action Alerts PLUS portfolio.)
It continues to be a market for playing index moves rather than stock picking, which can be frustrating if you like to hunt for setups like I do, but it is what happens when we go through corrective action and a bounce.
We'll see what happens on AAPL and go from there.
Have a good evening. I'll see you tomorrow.