Last week the U.S. equity market spent most of its time worrying about a possible Act II for the global financial crisis. Earnings did not matter. As a result of the fear, the dollar was super strong and dollar-denominated assets (equities, commodities) demonstrated an equally strong inverse correlation, i.e., they all went down. By mid- day on Friday, March crude oil had fallen to $69.50/bbl, its lowest level since mid-December.

After posting two triple-digit up days in a row, the Dow paused on Wednesday to catch its breadth, or breath. Large-cap tech attracted some investor interest ahead of Cisco’s earnings report and Cisco did not disappoint. CEO John Chambers forecast that the networking company would post fiscal third quarter sales growth of 23%-26%, well above analysts' consensus of growth in the mid- teens. That said, shares were up less than $1 (or 4%) in after-hours action.  

The major indices made new lows on Wednesday, but the selling was not serious. After another benign FOMC announcement, the Dow managed to rally 150 points from the low of the day, closing up 42. The technical pattern is called ‘3 drives to a low’ and you can see a chart of it below. The pattern is bullish and suggests that today we will get the best bounce since the decline started.