With the DJIA having bounced a nice, neat 1,000 points off the January 12, 2015 low, the question of the day is if we've seen the bottom of the recent correction - or - if the current rally is simply the traditional oversold bounce that tends to accompany meaningful declines.
Obviously it is nearly impossible to know the answer to this question. However, sometimes a good old fashioned debate can help one determine which team the odds seem to favor at this time. So this morning, I'd like to present my "on the one hand, and yet on the other" view of the recent stock market action.
On the One Hand...
Let's start with the good news. It is positive that the bulls were finally able to put on a good show on Friday. And it's a plus that Friday's launch party occurred after several days of "waffling." The glass is half full gang tells us that this means last week's action can be seen as "base building."
It is also a modest positive that stocks did not immediately reverse course on Monday - especially after the weak open. You see, instead of flushing lower and giving up a big slug of Friday's gains, the bulls appeared to be able to hold the line on Monday.
Next, don't look now fans, but the situation with oil may be improving. Well, the "situation" as it relates to the U.S. stock market anyway.
By now everybody knows that stock prices have been tied to oil for quite some time now. However, on Monday oil went down - a lot - and stocks, well, they didn't follow suit. So, while one day does not a trend make (unless you can trade in milliseconds, of course), one can argue that the correlation trade may ...