The market produced a snapback rally today. After the size of the recent decline the market is short term oversold and a rally was to be expected. After a sell off the quality of the bounce is important in determining if the worst is over. Today’s bounce was not that impressive. The major averages opened higher before some selling came in and took away much of the gains. Buying came in before the close and all the major averages closed near the highs of their intraday trading ranges, a good sign. The gains were pretty evenly divided. The COMPQ and the NDX gained 1.39% and 1.42% respectively. The SPX rallied 1.30%. Volume was the key. It was down across the board, by 7.17% on the New York and 16.32% on the Nasd. Not what you want to see on a bounce. Leading stocks were higher as well with the leaders index gaining 2.74% on the day. It closed in about the middle of its trading range but held the 50dma. It closed below its short term 9dma and 17dma. Volume was lower but still above average. As I said above one of the most important things to watch after a sell off is the quality of the bounce. The bounce today was not that impressive. The gains were a small fraction of just yesterday’s losses and even less compared to the declines of the last week. The real key was volume. It was down considerably from yesterday’s levels. This shows that there was less buying pressure today than there was selling pressure yesterday. That usually does not point to higher prices. We would have to see more upside action accompanied by strong volume to improve the picture. Right now the weight of the evidence points to lower prices ahead. Jerry