Today we got the inevitable bounce that we were looking for as the Dow soared 548 points on good volume. The advance/declines were better than 6 to 1 positive. The summation index is still moving down. Today we got some relief from the extreme oversold conditions that have stuck around longer than usual. Now we have to ask ourselves if the decline is over. It very well could be as the S&P 500 along with other major indexes managed to hang on at the June lows. However the same negative market fundamentals are in place. The only case for a rally would be technical in nature. The truth is nobody knows where we are going from here. Things could turn back down Friday with the inflation data. However with the both the short and medium term technical indicators for the market extremely oversold, the odds favor at least some kind of stabalization. Even if it's just sideways movement for a while. The S&P 500 is still pretty far away from its 50 day moving average. Gold rallied $33 on the futures. The US dollar finally had a down day and interest rates dropped. The XAU gained 6 1/8, while GDX rose 1 1/2. Volume was heavy to the upside. The gold shares as well were overdue for some kind of bounce after being beaten down for months. The same question can be asked of whether this is the end of their decline or just a one day wonder. The underlying fundamentals for gold haven't changed and they're negative. On the plus side the GDX October calls that I have are now shwoing a small profit. Yesterday I thought that I would just exit on a bounce. Today I'm considering holding them a bit longer. There is plenty of time in the October option cycle for this trade. I did place another order for the gold share calls overnight at a closer to the money strike price but it wasn't filled. At least the ideas are moving in the right direction. Mentally I'm feeling OK. The VIX dropped and implies higher stock prices to come. The short term indicators here have rolled over and have plenty of room to go lower. However I haven't been able to really figure out what's going on with the VIX lately. Todays rally out of nowhere also is classic bear market action. But I do think that we are in for some kind of pause at least for the recent decline. I could be wrong. Asia was lower and Europe slightly higher overnight. We'll keep an eye on tonights headlines.