The stock indexes posted their largest one day advance ever. Of course that was coming off a severe waterfall type decline and from a deeply oversold condition. With banks and bonds closed, some weekend news, and a somewhat indecisive candle from last Friday, it was no surprise that bulls would at some point take control and try to pound the bears back into submission, but it was surprising to see over 900 Dow points in one session. It is encouraging that the whole advance didn’t get reversed in the final minutes of trading, which has been the pattern lately. It is extending a bit more in the evening session as I write this. Volume was a little lighter than over the past few sessions, but still on the heavy side. All trending indicators that I follow on the indexes as well as on the advance/decline ratio are still pointing straight down. The deeply oversold condition is being relieved by this rally. As I said a couple of posts back, picking bottoms can be messy. I prefer to trade in the direction of the trend, which is still down. There was bound to be a bounce, but the way I view the markets it would have been a hipshoot to jump in on the long side, as there was little evidence of momentum divergence or trend change, although very short term momentum had been turning up from oversold, as can be seen in the chart. Hipshoots can work out once in a while. V shaped bottoms in the stock indexes are not too common. I might have to view another market to find a similar situation. Perhaps an old pork belly chart, or perhaps orange juice. The S&P 500 is making swings more familiar to traders who trade those wild commodities. I’m not sure I want to adapt my trading approach as I would assume the stock indexes will return to a more normal type of range and volatility when economic conditions calm down. Another possibility in the new era of socialism in the US is that we are entering an economic dark ages. I hope not.