One of the positives of bear-market action is that it causes a change in emotions and produces some interesting trading opportunities. This morning we had a particularly good example, as the mood was quite gloomy before the open. We didn't even have the usual chorus of contrarians anxiously predicting a bounce. So often the bounces are completely anticipated, and we price them in before the open.
The bounce this morning didn't even kick in until we opened, and then it really gained steam quickly. The fact that the bounce caught more folks than usual by surprise may give it some legs. What is likely helping to drive things at this point is that Jane Yellen is on the agenda in front of Congress -- and market players are hoping she will adopt Mario Draghi's position of doing "whatever it takes."
The important thing to keep in mind is that this is a bounce. Bounces within ugly corrections can be particularly vicious, since people are not ready for them and they scramble to add long exposure. Give it a little room to the upside, but there is no reason to believe that this is a meaningful bottom. The issues that have been weighing on the market are not suddenly cured by this better price action.
I've been playing with some ProShares Ultra QQQ (QLD), but I still see little that is appealing in individual names. Facebook (FB), for example, is one I'd like to add as the market improves, but the bounce this morning doesn't do much to change the overall technical position.
Don't buy what the bulls will tell you. This is still a downtrend and this sort of bounce is routine action.