It appears that the news out of Europe, that the EU is looking at further measures to recapitalize the banks, was enough to halt what was likely going to turn into a very nasty drop into the employment report on Friday. Instead, what started as potentially very ugly morphed into a key reversal day. Since the market was getting very late in its daily cycle this will likely mark not only a daily cycle low, but a greater degree intermediate cycle low.
I've noted in the past that these intermediate degree bottoms are often accompanied by a significant divergence in momentum. You can see on the chart below that this often plays out as a large divergence in the McClellan oscillator.
The market should now make another attempt at a respectable bear market rally. I would think a very minimum would be a return to the 75 week moving average.
And considering the amount of time the market has been consolidating a move back to the 200 day moving average is not completely out of the question.
I think we probably just saw a major turning point today - one that should mark a bottom for at least a couple of months.
Source: Gold Scents
