is creeping back up to the 50-day EMA, and a test of the old support could be in the cards in the short-term.  Since the S&P has not put in a lower low yet, the uptrend is holding despite the break in the rising trendline.  Although it may be a little early, a move up to that rising trendline and the 20-day EMA is a good possibility.  I could see a move to 1060-1070 before any downside resumes.

Why?  Because the market is still oversold, the ARMS Index is down near 1.5 as we discussed yesterday, this week's sentiment survey bulls to bears ratio was 0.76 to 1 (extremely bearish, which is bullish), and take a look at what the market leader just did...

                      

The market leader Dow Transports shot up 5.3% on huge volume yesterday, and the bounce is coming off of the 200-day EMA.  Granted this move was a direct result of Warren Buffett announcing that he is buying a major railroad company, but that vote of confidence from Buffett helped many of the transportation stocks. 

The put / call ratios of the dumb money (CBOE and Equity) are at levels that have triggered rebounds earlier this year.  The smart put / call ratio (OEX) isn't really telling us too much right now.
                    

This Wall Street Sentiment Survey taken last Friday is a smart money survey and you can see that they were quite bearish near the top in mid-October, but have gone from 80% to 41% bearish since. 
                     
                  Charts provided courtesy of www.decisionpoint.com, analysis by TSP Talk

40% bearish is still not a great signal, but it could mean they are expecting a short-term bounce this week.

The dollar shot up early yesterday morning but settle well off the highs after having hit the 50-day EMA.  Stocks were down earlier in the day but they started to rebound just as the dollar started to fall.


                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

If the dollar is going to remain in a bear market the 50-day EMA will probably hold.  The downside in the stock market probably won't continue unless the dollar starts to rally again - but that is not too far fetched.  The steep downtrend was broken in the dollar but we do not yet have proof of a new uptrend. 

I am still a little concerned for the market because of some of the breakdowns in the charts, but at this time I can see a little oversold bounce showing up.  What happens after that probably depends on whether the charts can mend some of the damage that has been done.

That's all for today.  Thanks for reading.  We'll see you back here tomorrow!