My instincts did not betray me last night as I wrote that I "felt" something big was about to happen....and it did. A massive rally with tremendous internals steamrolled any bear caught outside of his cave. But is it the real deal or not?

The internals were massively bullish with upside volume and advancing issues well over 90% each. However, we've seen several technically bullish days during this bear and they've all been retraced. How do we know if this one is any different?

We don't. At least not yet. It's how the market responds from here that'll tell us if this more than a one day wonder. There's lots of resistance ahead for the markets to deal with so it's got it's work cut out for it. 

The biggest is the breakdown level on the S&P, about 740. If the market can penetrate that to the upside we may have seen an important intermediate term low. If we see a move to that area and heavy selling sets in, today may have been a one day wonder.

Other indicators I look at suggested an intermediate term low should be imminent, and then today happened. For that reason, and a few others, I have to give this rally the benefit of the doubt. 

If you noticed, the chatter about mark to market and even the up tick rule was everywhere today from Bernanke to members of Congress, even to the SEC themselves.  You know my feelings on those topics so I won't repeat them here. 

The weakness in Gold and the XAU accelerated today as I've expected. If stocks continue to rally, these areas should continue to suffer.

Two plays for tomorrow could be to buy any morning weakness near 700 or to short any morning strength that reaches 740. Stops on either side should suffice.