Let's talk about the statistics from Monday's oversold rally. They are quite different than last Thursday's rally.
For starters there is breadth. It was quite good, with one of the best readings since Thanksgiving -- so let's call it two months. That's a long time to wait for good breadth, but recall that the McClellan Summation Index peaked the second week of December, so it makes sense that breadth hasn't been great since then.
For well over a week, I have been harping how we would get good breadth, but the details on volume were so vastly different than the breadth readings. That was not the case on Monday. On the New York Stock Exchange, 81% of the volume was on the upside. So breadth was good and volume fell in line.
Over on Nasdaq, it was a similar story with 81% of the volume on the upside and good breadth.
So why did the market feel so, well, indexy?
That's because the stocks that were up were mostly the ones that move the indexes. Also, none of the indicators changed, except that you can see the bounce in the Overbought/Oversold Oscillator.

I do not think the volatility is going away. I do think that if we see the market retreat in the next few days we'll head right back to a short-term oversold condition, so I would not be surprised to see quite a bit of up/down/up/down type action, similar to what we've seen over the last week.
In the meantime, I want to have a look at the chart of the Transports. They have been one of the worst groups in January, down about 8%-9% through last Friday. The pattern that it has mapped out these last few months is somewhat similar to the pattern it mapped out in September and October.
There are two "humps" that look like the chart is rolling over and it threatens to break, but in the end gets saved. The support line (black) is not perfectly flat, either, but rather has a downward slant, even if it is minor.
If the oversold rally cannot rescue the Transports, I would consider that a warning for the market overall. If the market is going to be OK, then the pattern should begin to shape up in a similar manner. I suspect it does not play out exactly as it did in November, but I do think we should see a rally in the Transports. If the chart opts to breakdown in a meaningful manner I would consider it bearish.

Then there is silver -- the new plaything in the market. It did breakout (using iShares Silver fund (SLV) on Monday, but the Daily Sentiment Index (DSI) is now at 91. It was last at 91 at that blue arrow. A pullback toward the $25-ish area should not be a surprise.