Once most bearish influences are 'priced' into stocks (e.g., Greece and Fed Dread) the Market can find equilibrium. Support demonstrated at up trendlines offers favorable risk to reward for bullish plays.
"... did you think todays market action showed a bottom?"
I see today's price action as confirming a likely PRIOR bottom which 'set up' earlier. Today's strong rallies in the S&P 500 (SPX) and the Nasdaq Composite (COMP) were predictable in the sense that technical support was shown at SPX's and COMP's up trendlines before today.
Today's price action was 'proof of the pudding' of likely upside turnarounds but ones that initially started at the lows of June 9th, 7 trading days ago. That was when both indexes first dipped to their support (up) trendlines. Lows on Monday of this week (6/15/15) saw support come in a second time at up trendlines in SPX and COMP, suggesting that the indices were maintaining their previous upside trends.
Future market action is often if not most of the time predicted by prior chart patterns but many traders don't believe it until they see a sizable move develop. In an uptrend, waiting for a substantial rally to suggest continuation of an uptrend is to be captive to waiting PAST the best trade entry point. By the time that a trend reversal is obvious, option premiums will have jumped significantly. Many of the most successful traders anticipate moves BEFORE they happen. Timing is everything.
Anticipating trends applies in other ways than trading. Recent research has shown that success of start up companies has the most to do (about 40%) with 'right' timing. Airbnb started when the last recession was upon us and suddenly people were willing to rent out rooms, guest cottages, etc. to strangers. Before it was the right time for its business to take off, this start up couldn't get venture capital funding. Once they started getting business it was another story.
As to the likely resumption of an uptrend, the tech heavy Nasdaq didn't retreat much compared to the S&P stocks, a pattern that was suggesting that it was likely a matter of time rather than IF new highs would be made in Nasdaq. Show me a time when Nasdaq was showing strength and the S&P just kept declining. Doesn't happen!
Nasdaq resisting any big declines was a tip off to an eventual rebound in the overall Market. When WAS a question! The S&P provided a tip off for a possible bottom when its 13-day Relative Strength Index (RSI) got 'fully' oversold (around the 6/9 low) and not seen since mid-March just prior to a good-sized rebound then.
Lastly as a general note, I pay attention to the bullish/bearish trader sentiment as suggested by the ratio of daily CBOE equities call volume to put volume which is seen in my CPRATIO indicator.
When you see a good-sized rally like today and a breakout above down trendlines (SPX & COMP) OR a move to new highs (COMP) without much of a jump in call volume, this is a rally that I typically want to participate in. I like to bet against the herd so to speak. Conversely, I feel somewhat uncomfortable continuing in bullish option plays when traders are very or wildly bullish.
THE S&P 500 (SPX) DAILY CHART:
When I talk about 'favorable' risk to reward such as in buying into a dip to technical support implied by a dip(s) TO a well-defined up trendline such as seen below, it's because a close by exiting stop can be set so as to EXIT if the trendline gets pierced even a little. Relative to such a (likely) small loss on such a trade, upside potential is substantial on a rebound.
In the case of the two different declines to SPX's up trendline at 2072, which would appear to be a place to place bullish bets, I'd exit at 2065-2067 in an assumption that even a relatively minor break of the trendline would suggest a continued move lower.
Relative to risking as little as 5 points, the rally so far has gained around 50 points from the lows. Risk to reward here could be seen as 1 to 10 assuming entry right at the trendline and an unusually high ratio. The point is that it can pay to ANTICIPATE a bottom at likely chart support rather than wait for a big rally to 'confirm' a likely trend turnaround such as suggested today. Yet to come of course is a move to new highs in SPX to follow COMP.
THE NASDAQ COMPOSITE (COMP) DAILY CHART:
COMP has 'confirmed' likely resumption of its uptrend, not only by holding support implied at its up trendline but by moving to a new high in the current move.
There's not too much more to say about COMP's chart relative to the S&P as recent lows also occurred at trendline support. The up trendline is steeper in its slope and of course a move to NEW highs has been seen. Further upside potential, assuming a move to implied resistance at COMP's upper trend channel line, comes in around 5200 currently.
GOOD TRADING SUCCESS!