If you were ever in doubt what capitulation looks like and feels like, squirrel away the memories and feelings from the last several days.

Going forward, I view the meltdown to be similar to an earthquake, where there will likely be a few aftershocks. The markets are in no way “safe” now that we have likely seen an intermediate term bottom, but I do feel that the Armageddon trade is off the table. What I expect in the near term is more of the same: volatility peppered with copious amounts of whipsaw.

On the chart above, the Dow rallied just above the 23.6% Fib line, and is headed for the area of 10,250, which represents the 38.2% retracement level. I will be looking for resistance a little lower than that though, as the Dow approaches the area of the lower channel boundary.

I would like to see the Dow cover this ground in a very short period of time. As I write this, S&P futures are up 2% 3%. Maybe Dow 10,000 can be hit tomorrow. Should it reach this level very quickly, I recommend taking some profits, looking for some shorts, or picking up some diETFs.

A quick message from Debbie Downer:

Traders should keep in mind that the Dow could go to new lows, after rallying and consolidating a while. With the worst stock market slide in history and a severe recession blanketing our country, always keep in mind the Dow 1929-1932 charts.

Debbie Downer would also like to mention that volume was above average today, but not phenomenol. Obviously, the sellers were exhausted during Thursday and Friday’s capitulation.