Today's rally was in response to the government creating a 'bad bank' to buy up the toxic debt clogging the balance sheets of U.S. Banks.  The thinking is that would allow banks to lower cash reserves and allow them to get back in the business of lending again.  The idea sounds good, but all that solution does is saddle the government with the toxic paper in addition to the bloated. pork laden 'stimulus' package that Obama, Pelosi, and Reid wants to shove down our throats.

At any rate, the markets cheered the possibility of such a facility being created, along with the Fed saying basically nothing new and gains were held wire to wire today.  We finally registered gains on above average volume which is encouraging.  The rally that I discussed as possible over the weekend now seems to be unfolding - or is it?     

Volume on Monday and Tuesday was a concern, but today's increase in volume says that buyers were at least mildly more interested than they have been.  Recall that over the weekend I said that a rally was definitely possible, but the way this rally is unfolding is not yet selling me on the idea that this market is headed sharply higher.  There was no breakout in today's trade, in fact, the indices continue in their triangular patterns of indecision. 

The Nasdaq 100 has been the leader over the last three trading days, so let's take a look at that chart.  Notice how today's gains merely took price to the top of the triangle with no breakout.  Charts of the Dow, S&P 500, Nasdaq Composite, and Russell 2000 show that they are not as close to the top of their triangle formations, indicating a lag in the broader market. 

Today's price action also ran smack into the 61.8% retracement of the November 4 - November 21 decline.  Also notice the time measurements that fall on January 29 - February 3.  These dates could signal a short term top, giving the indices a chance to consolidate before making a serious assault on the January 6 high.  January 29 contains a critical Gann cycle date as it is exactly one year and one quarter after the October 2007 top.  If selling returns in earnest in the form of more ease of movement to the downside on a pickup in volume, the rally that I built a case for just a few days ago could be in jeopardy.  This is a critical time.