The rise last Thursday gave us the confidence needed to say that the bottom of this correction was almost certainly June 13th and that a very powerful rally is just about to begin. We have compared the sentiment in the recent decline to the October 2002 bottom and we strongly feel that we will have an enormous move higher from here in the months ahead.

The first chart is of the NASDAQ Composite. We have shown a similar chart in a previous commentary and you can see that we have pointed out the most recent accumulation day (higher move on higher volume) with green arrows. The indicator behind the chart is up volume divided by down volume. Usually enormous spikes in breadth trigger huge inclines when a bottom is being formed. The green line shows the downtrend line that has been broken and horizontal support is also shown on the chart.

The next chart is of the S&P 500. Two weeks ago we showed the same chart of the down channel that the index was currently sitting in. You can notice how last Thursday's tremendous rise led the index to break above this channel, suggesting an end to the decline and higher prices ahead. Support is shown with the horizontal line.

The third chart is of the Russell 2000. You can see how this index was in a similar down channel and how it was able to break above the channel last Thursday as well. Support is noted on the chart.

The final chart is of the NASDAQ 100. Still, this chart looks less constructive. We have shown the up channel that the index has been oscillating in the past several weeks and today's low is just slightly higher than our support line. The NASDAQ 100 has to at least stay above this support line if we are to believe that the index will not retest the bottom uptrend line at the very least. A break above the 1590 area would give further evidence that the NASDAQ 100 has reached a bottom.

Volatility began to increase with the recent downtrend and we believe that volatility should continue to increase in the months ahead. With this increase in volatility we believe we will see much higher prices in the stock market.