Our trend reversal signal (TRS) for the NASDAQ Composite reversed itself to upward mode on Monday. Over at The Big Picture, the consensus is that this a bear market rally from an oversold position. Perhaps the strongest technical support for this view is that the index has risen 7.6% for the week on volume that was 30% below the 50 day average and rallies built on weak volume rarely last. Certainly threats, both technical and fundamental, remain. The next technical resistance level is at the 200 dma level, less than 1% above Friday's close, and after that 2862, 7.3% higher.

The fundamental threats to a continued rally are the lack of consumer spending to create demand and the continued threat of bank failures in Europe and the risk of contagion to domestic banks. Although the Commerce Department reported an increase in retail sales in September - and by extension an increase in demand - these were seasonally adjusted numbers and the raw data actually shows a decrease in spending (382 billion in September vs  402 billion in August). Consumer spending will continue to be constrained until the unemployment rate comes down and the housing market begins to recover (some estimates are that it has another 7% to fall). By Sunday we should know the outcome of the G20 meeting, which is sure to produce an optimistic press release, but the doubts about the stability of the banks, and therefore market volatility, will likely remain.

No new features this week.

We are working on extending our TRS methodology to individual stocks and hope to have some preliminary results next week. In the interim, use the Stock Timeliness Checkup tool as an guide to when to enter or exit a short or long position.