A Quick Note on Today's Markets

Below are three 10-day charts of the averages in 5-minute increments. Notice that all three appear to be consolidating.

In addition, consider this passage from today's IBD:

Since marking a new low in below-average volume Monday, the Nasdaq has avoided sinking beneath that 2168 level. A 4% pop Tuesday kicked off a new attempted rally, fueled by the Fed's $200 billion plan to trade high-quality Treasuries for subprime debt.

Thursday was Day 3 of the rally attempt. Should the indexes surge to big gains in increased volume Friday and beyond, that would mark a follow-through day, which confirms that a rally is under way.

The past two follow-through days, however, have gone nowhere.

One secondary factor that has changed, though, is the Accumulation/Distribution Ratings for the indexes. The past two failed follow-throughs did not have a major index with a rating of B- or better.

The Aug. 29 follow-through, which worked, had a B+ in Accumulation for the Nasdaq. The composite now has a B- rating.

Another factor that has changed is the surge in bearish newsletters. For the first time since October 2002, the ultimate bottom of the bear market, bears outnumbered bulls in the weekly Investors Intelligence survey. That crossover often occurs near a bottom, though it's not a precise timing tool.