Yesterday started off with the hope that Friday's sharp reversal marked a bottom. People have grown accustomed to V-bottoms as nearly every bottom in the past year has been a V- bottom. Needless to say, people were not very happy with the results. Nearly everything I read was negative and cited the discouraging action.
I was encouraged by the reactions. I suspected that a lot of renters were shaken out yesterday. The Rydex data confirmed my suspicions as traders turned significantly more bearish. We are now in the area that marked other bottoms since March in the Rydex data. The bear side is getting crowded. I don't expect much downside from here in the short run.