Last night, the Bank of Japan announced that they are adding further liquidity to the market. Risk assets around the globe have responded by rallying sharply. I still believe the market is too tough to call in the short term.
The bears will say that the divergences have been building with every rally. Signs of complacency and extreme sentiment are all around and the market is trading at above average valuations. The economic backdrop is precarious and more negative surprises like Dubai World are probable.
The bulls can point to the fact that we are at the beginning of the month and a seasonally strong time of the year. In addition, the market is closer to being oversold than overbought and we have seen some put buying in the past few days. Both the bears and the bulls have good points.