The market has rebounded nicely today and appears ready to make a second attempt at breaking above 1220 on the S&P.  The high on the futures as of the time of this writing is 1206, still below the previous high of 1216 set on Monday.  Caution remains until the market breaks above Monday's high.  Another note, the volume is lower today than on the sell-off Tuesday.

Today's market action is important in whether yesterday was simply a profit taking session, or the start of something more bearish.  The excuse the pundits are using for yesterday's sell-off was the downgrade of Portugal's debt rating, raising fears that Greece's problems may be spreading throughout the EU.  We all know that the market hit major resistance at 1220 and whatever the news of the day was would have been blamed for the sell-off.  The market will tell us.  Following a big volume sell-off as we experienced yesterday, needs to be reversed on equal volume if the

Following the reversal on Friday, we will be watching closely the market action on Monday.  Was Friday an isolated event based on the curious timing of the Goldman Sachs news?  Or after reaching the 1220 level that we have been watching for so long, is the market in for a change of direction?  There is still talk on the street of a tremendous amount of money on the sidelines waiting for a pullback to move in.  That's why Monday's action will tell us a lot.  We have a couple of great looking Strangles setting up that we will enter at the right time.  It is still

The early malaise in the market has been erased with a modest rally into the afternoon.  As mentioned in the morning blog, the market is waiting for more definitive earnings reports before the next directional move will be decided.  GOOG reports on Thursday which will obviously be watched very closely.