The answer is not yet. There are two reason I think this. First, technically we are overbought right now according to the MACD and RSI. But more importantly, the market is assuming the economy is on the verge of a rebound and frankly, I don't see it. Consider the following from the latest FOMC minutes:
The information reviewed at the March 17-18 meeting indicated that economic activity had fallen sharply in recent months. The contraction was reflected in widespread declines in payroll employment and industrial production. Consumer spending appeared to remain at a low level after changing little, on balance, in recent months. The housing market weakened further, and nonresidential construction fell. Business spending on equipment and software continued to fall across a broad range of categories. Despite the cutbacks in production, inventory overhangs appeared to worsen in a number of areas. Both headline and core consumer prices edged up in January and February.
Simply put, this is not an environment where stocks have the economic fundamentals at their backs. And that makes this a bear market rally.
Now -- on to today's market. As always, click on all images for a larger image
The 6 day chart shows that prices consolidated last Tuesday and Wednesday, jumped on Thursday and then continued their move higher today. Today note that prices opened lower, rallied and then fell until about 11 AM when they started to move higher for the remainder of the day. However, there was a large sell-off at the end of the day on high volume indicating traders did not want to keep positions overnight.
On the daily chart, notice that prices are still in an uptrend. Today's action merely provided us with a slight technical improvement over yesterday. However, pay particular attention to the lack of volume, especially over the last week or so. Trader's have not been participating in a big way. Now -- there has not been a sell-off either, which is good news. But, there is still plenty of reason to be concerned at this point.
