Benign Consolidation

The market gave back some of its outsized gains from yesterday, but just a little bit. Considering the S&P gained +47 points yesterday, I am not too fazed by giving back 11 today. And volume shrank, which is what you want to see on a pullback.

The Investor's Intelligence poll came out today, and it showed more bearishness that it has at any time since October 2002 - the bottom of the last great bear market. The market bottomed that month, and a new bull market began several months later.

Today, the put/call ratio remained high, indicating that there are still plenty of skeptics looking for new lows in the near future.

I will admit that there are a lot of cross currents right now. The market had been higher most of the day, but bond yields started to plummet, which likely worried traders. Also, the dollar plunged today, and the euro and yen spiked to new highs.

It will be hard for the market to bottom without some stabilization in the dollar. And gold and oil were also up today, although the energy stocks were down on the day. So lots of crosscurrents right now, which makes it tough to get any real clarity on the markets.

For now, the markets remain oversold and I think we continue to build on yesterday's rally, at least up to next week's FOMC meeting. One step at a time.