Are Stocks on the Launching Pad Right Now?

Was Turnaround Tuesday the real deal and a launching pad for stocks?

Or was it a dead cat bounce?

They say the sharpest rallies occur in bear markets, and that was certainly the case in 2008.

The market can rally for 1 to 3 days in a bear market and not mean anything.

It is only the behavior after the first pullback following a sharp rally that reveals the line of least resistance.

Bulls are looking at the current pattern as a double bottom with the early March low with a similar pattern, an undercut and recapture of the 200 day.

However, there is a T-Rex in the ointment.

The SPX & NAZ both have carved out Head & Shoulder formations.

Only clearing and sustaining the Necklines of this pattern is an indication that the path is higher.

A break back below these ‘double-bottoms’ and the 200 day moving average could result in a waterfall decline — especially with Tuesday’s blasting through shorts potentially leaving the market more vulnerable having exhausted that potential buying fuel in one fell swoop.

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