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I have already mentioned in my Thursday's "NYSE Advance/Decline" post about my thoughts of coming reversal as a reaction on extremely low Advance decline reading in all market sectors including but not limited by the S&P 500 index sector, DJI index sector, Nasdaq 100 index sector and most important by NYSE Composite sector.
When could we expect it? It is possible that Friday's drop down and strong recovery marked the bottom (support level). It could be that we still may see some volatility and slide down... Yet, I consider that we can see up move very soon. Taking into account the volume during the recent correction I would say that the market (indexes) have been strongly oversold and it is predisposed to move up to the February 2, 2010 highs and even to the January's highs.
I understand that many traders are afraid that the recent crush may grow into long-term recession. Personally I do not even consider it right now. Long-term recession and stock market crash does not start suddenly. There should be very bad economical news to trigger recession. Yes, we can see a year of side way trading as it was in 2004 and 2005. Yes, during this sideway trading the stock market can go lower. Yet, I do not think that somebody was able to generate another bubble, unless there are political factors that we not aware of and which that may affect the economy (inability of Government to stimulate economy, refuse from China to buy Treasury Bonds, etc)
Coming back to the technical analysis and by taking a look at my traditional set of technical indicators on the hourly chart I may say that may technical analysis is mostly bullish. Many of technical indicators are showing bullish signs and many of them are on the edge to become bullish:
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