After yesterday's blast, bears took another chunk out of the recovery. Bulls might actually get more joy with a small position at the lows of the last three days in Large Caps. Pre-market action will be key; should it look like the market will open below the 3-day low then there could be a runaway lower. In such case, waiting for things to settle after the first 30 minutes of opening trading may offer a better entry.

After weeks (and weeks) of inactivity, markets have delivered two big days of activity: Friday's sell off and today's recovery. Which of these days delivers the basis for market action over the next few months remains to be seen. One could argue today's lighter volume and inability to recover all of Friday's losses gives bears the edge, but the longer term trend is all bullish. I am biased by holding a Dow Jones short, but intermediate term technicals have turned bearish for both S&P and Dow. The rally in the S&P stalled out at the 50-day MA. The index has underperformed since July and Friday's gain only made modest in roads into returning to a leadership role.

There wasn't a whole lot of action in markets today. The absence of selling is good news for bulls (more so than the absence of buying is good news for bears). The Russell 2000 was one exception as it gained 0.6%, closing near its highs. Watch for a MACD trigger ' strong buy' in the coming days. The relative performance of the index continues to outperform. The Nasdaq wasn't far behind as it made small gains, but enough to finish near the highs of the day. While the percentage gain was small it did finish with confirmed accumulation. Large Caps had the quietest day of the lead indices, effectively holding station. However, the action does appear to favour bulls (speaking as someone with a non-confident, but minimal risk, short position in play). For tomorrow, it will be a chance for bulls to spread the love from Small Caps and Tech to Large Caps (taking my short position with it). I would like be to wrong, but tight action suggests the next grind will be

Tuesday's action came as a bit of a relief for bulls worried the return of Traders from their holidays would kick start a wave of selling.  For a while it had looked like sellers were about to get what they wanted with a picture perfect break from tight action (in the hourly chart), but it came back strong to close near highs. For example, the Dow showed this reversal nicely.