More 'stock market bottoming' seems to be in the air lately, as always attributed to some 'government will save us all' plan. Color me skeptical. Interesting to note the potential double bottom in the NASDAQ-100 though, tech (and smallcap) have traditionally led the way out of recessions. It will be critical to see how the index reacts here in 'overbought' territory; will it push through and remain overbought or will there be a giant throwback and resumption of the march lower?



The SPX is in a much tougher technical position in my opinion. It is still in a clearly defined downtrend hovering precariously above a 50dma breakout and bumping against a down trend channel.



This is a chart of the percentage of SP500 stocks that are above there 50dma's. I have found its extremes to be pretty reliable indicators of tops and bottoms, however it will not in my experience indicate the severity (time frame) of the trend change very accurately, ie. whether it is a short term pullback or a change of trend. Putting this technical picture together in its entirety leads me to expect two scenarios - a small pullback and then a resumption of upwards movement in the indices or a violent throwback that begins the next leg downward.