I have been looking for a near-term bottom in the stock market either this week or next, and I think we got it.

Yesterday was a huge up day, followed by another big up day today.

The panic bottom on Monday was accompanied by tremendous volume, almost equaling the record volume on the lows in January.  Today's volume was bigger than yesterdays, and yesterday was heavy, suggesting the market is ready to bounce.

Anecdotally, talking to other professionals in the market, they are telling me their clients are scared, both on the institutional side and the retail side, with a crescendo of investors getting out of the market and into cash at all costs. 

Earnings that are not disastrous, collapsing energy prices, and a delayed effect of the GSE bail-out are propelling stocks higher.

I covered more shorts over the past few days and am now net long for the first time in a while.  I also blew out my gold position luckily before it rolled over.  I will use any weakness over the next few days to continue covering down short positions and to add trading longs. 

This is a bear market bounce that I believe will last a month or two.  The shorts are in total control of the market and I expect to retest the lows once again later in the year.

But in the meantime, I think the market is headed higher.