David Fuller's view

Here are 5-year weekly charts for the Russell 2000, which signalled the recent downward break, plus the DJ Transport Average, DJ Industrials, S&P 500, Nasdaq 100 and Nasdaq Composite.

It is certainly a good bounce, especially for Transports.  We have seen plenty of short covering in the last four days, in addition to some new buying.  Monetary policy remains positive, despite the imminent ending of the Fed’s QE.  This year’s three black swans – Russian aggression, Isil and Ebola – are at least temporarily off the front pages.  However, the indices above have lost uptrend consistency characteristics, as supply has at least temporarily matched demand.  Price churning is often a reversal signal of at least temporary duration. 

Sustained moves to new highs are required to reassert demand dominance.  Meanwhile, the short-term oversold condition has been corrected and resistance near the highs will make further gains more difficult to achieve.