By John Ward (previously published at bigwavetrading.net)

No doubt about it, this market’s price/volume action continues to impress. When we rally, we do so on heavy volume; when we pullback, volume contracts and, more than that, we have gotten into the habit of closing in the upper part of the day’s range. Just what you want to see. Yet don’t be lulled into thinking that all is now hunky-dory (the Put/Call falling to .60 tells me many have). This rally, while impressive given the gains of the past month, still leaves much to be desired.

As it stands now, only the Nasdaq trades above its downtrend line:

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It appears market participants were so desperate to find a bottom they’ve pushed this market beyond normal conditions and now find the market to be overbought.

Markets are always trying to find the equilibrium between buyers and sellers.  At the moment, we had swung so far down the market has to have a natural reaction to the move down.  Thus, we’ve created the “V” market bounce from new multi-year lows to counter balance the massive amount of selling we’ve seen this year.  “V” shaped bounces can be very dramatic, but short-lived.  They will always fail to produce “the” bottom unless there is a period of consolidation where you see the market under massive accumulation.  At any rate, today we are seeing the market move quickly into extreme overbought conditions which serves as a point of caution that this move is nearing its end.

As far as current leadership, John Ward posted an

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