S&P Recovery Impressive

The S&P 500 SPDRs (AMEX: SPY) continue to grind higher off of Mon.'s extremely oversold condition, which as of this moment, represents a recovery of 32% of the entire decline from the 2/22 high at 146.39 to the 3/05 low at 137.08. I don't know if I am jaded or what, but the recovery to me seems muted, lethargic, sluggish... Yes, I understand that some of the sentiment readings (put/call ratios) and breadth data (A/D line) for example, exhibited historically oversold extremes during the recent decline, which warn us that a significant low might be in place. On the other and, the pattern carved-out within the decline exhibits very bearish form-- a warning that more weakness is out there after the oversold condition is neutralized. Furthermore, my sense is that the July-Feb. advance was all about liquidity, liquidity, liquidy. What if the directional flowof that liquidity has been reduced, or stopped, or even reversed? Then what? Under such circumstances, if the liquidity to extend the July-Oct. advance in particular, and the Oct. '02 to Feb. '07 bull trend in general, has been compromised, then I really don't care how many historically oversold readings were generated on Monday--- the buyingr power nonetheless will be absent. What we will be left with is a recovery bounce that works off of the oversold condition ahead of another bout of selling pressure prompted by investors looking to raise cash. Right now, I am unimpressed with the upmove off of a supposedly historic oversold condition. This market needs to "get on its horse" pronto to start to confirm the very bullish technical readings during the past plunge. MJP 3/07/07 1:10 PM ET 139.92
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