What a day for the markets and the US dollar. The Dow smoked up 300 pts and the US dollar demolished foreign currencies across the board. Oil fell 3%, gold fell........heck every commodity fell. Today highlighted two major actions--capitulation and intervention. As i warned a couple weeks ago, the central banks worldwide are intervening on behalf of the US dollar, and today currency investors capitulated and gave in to the onslaught creating huge gaps down for the euro, the pound, the franc--all of them. The charts look as if these currencies fell off a skyscraper. With oil already in correction mode, and carrying a strong correlation to the US dollar, it also tanked. Obviously all of these factors are great for the US market on a short term basis. Foreign money has been leaving the US stock market in droves partly because of the currency decline, and now it is likely that the sovereign wealth funds--fattened by oil revenues-- will not only keep some money in, but start putting it to work.

But be forewarned, we need evidence of significant bullish action before considering a buy and hold campaign. The market is having a short term rally within a bear market and deservedly so----sentiment was overly negative, and we have reversed the oil overhand and the US dollar slide for now. Lets keep fundamentals aside, and point out that from a technical perspective the market is badly damaged and well below its long term averages. The charts of most sectors indicate that they are in a long term downtrend. The only exception is health care--highlighted a couple weeks ago. Even there, the action is focused primarily on the biotechs, which are notoriously volatile. I like this area, but a true bull market must be driven by more than one sector. In prior bear markets, there were glimpses of hope in certain sectors, and those that bought before confirming broader market action got killed. There will be many countertrend rallies and no one knows how long things will last.Furthermore, it is worth noting that the long term charts of the currencies and oil and gold are still in bull market territory, and until we see much more significant declines for a much longer time period, the game probably isn't over there just yet.

I still like STJ, and JNJ also looks good as conservative plays in health care. Just be sure to bet light, and realize that the market can start correcting at any time with no warning. I am no permabear rest assured, a bullish environment is a wonderful and easy place to make money--but we need more confirmation than a good week or two.