“Presently, observable evidence suggests that stocks are no longer strenuously overvalued, as they have been for over a decade (with the consequence that stocks have lagged Treasury bills over that period). Observable evidence also suggests that the washout last month was spectacular enough (and the breadth reversal substantial enough) to allow for – not ensure – a sustained advance. This could occur even within the context of an ongoing bear market, if only to allow the natural ebb and flow of data to confirm or refute the fears already impounded into stock prices. On average, similar conditions have provided a basis for strong, if impermanent, recoveries – most likely beyond the extent that we observed through last Tuesday. The selloff we saw late last week looked a lot like a standard “re-test.” A large expansion in trading volume during the next advance, whenever it comes, would add to the sustainability of a rebound.”

I expect that there will be some unexpected good news, e.g. a sudden deal on GM, that will let loose some of the pent up demand waiting for an entry point.

Agreed. It would take a lot to overcome the gloom of today’s action and Intel’s lowered guidance. Look like new lows probably early tomorrow — after that, who knows? But there should be another bounce out there somewhere…