I think today's action was constructive for the bulls. Important levels on the S&P and Nasdaq were successfully tested. There were also a ton of my favorite bullish candlestick patterns made today. According to StockCharts.com there were 194 hammers and 188 bullish engulfing patterns made today. (those numbers include Canadian stocks though) My TC2000 hammer scan, which actually finds hammer-like patterns, found 197 stocks out of my universe of 971 stocks.
Given the technical picture I like the odds for a bounce. But I'm not sounding an 'all clear' signal. After all this is expiration week and we've got a lot of economic data being released, including PPI tomorrow and CPI on Wednesday. And until I see something that makes me change my mind, I think the next rally in the indices should be sold...
