The same way market players panicked out of the financials in early July, they are panicking back into them now. In fact, the ratio of the Bank Index to the S&P shows us something quite interesting.

First, as a refresher, I showed this chart in a very long-term format last week; I discussed the bottom in this indicator in 2000 associated with the high in tech stocks, and I noted this low could coincide with a high in the commodity names. I will remind you that I don't think we will know whether that was the low or the high until well after the fact, but the move is humongous.

We have gone from a ratio of 0.39 to 0.53. That is breathtaking. Now take a look at this chart on a shorter-term basis; note that we are just about to hit up against a downtrend line. If we go back to the actual chart of the Bank Index from yesterday's column, you will see I had suggested that 67 area as the high end of the range. Oh sure, it might be more like 70, but this chart below coupled with that one and the surge yesterday suggest a little breather is now in order for this group.

As for yesterday's rally, I have another bit of good news to add to it. The 21-day moving average of the ISE call/put ratio turned upward. I don't discuss this indicator very often, because it turns infrequently. Point A is the July 2006 low. Point B is the March 2007 low. Point C is the August 2007 low. Point D is the recent March low, and I've put a question mark on point E because we don't yet know the extent of this low's rise.

If you're wondering about that low between A and B, it is actually October 2006, which was not a low, but the point at which we finally broke out to new highs in the market. So that's the good news for this indicator on an intermediate-term basis. On a shorter-term basis, the reason for its rise is that we had the highest one-day reading since July 3, just before the recent swoon down!

Some of you have asked me to update the table of numbers we are dropping on the 10- and 30-day moving averages of the a/d line that I put in my column a few weeks back when I explained how I got the date of July 15 for a potential low in the market. I am happy to show you the numbers, but I fear I will confuse you!

When you look at the numbers we're dropping from these two moving average lines, you'll see a string of positive numbers on the 30-day moving average next to a string of negative numbers on the 10-day moving average.

That is followed by a string of negative numbers on the 30-day coupled with a string of positive numbers on the 10-day.

Perhaps when you see this table, you'll understand why I expect this rally to be choppy rather than straight up, as March was. The short-term moving average (the Oscillator I show each day) gets to a maximum overbought reading at the end of Tuesday, July 29, which is when the 30-day starts dropping another long string of negative numbers. The best rallies come when the two are dropping negative numbers on the same days.

It doesn't mean we can't have an upward bias; it just means that we are more likely to see fits and starts and group rotation rather than something all-encompassing. And that remains my theme for now.

Overbought/Oversold Oscillators

For more explanation of these indicators, check out The Chartist's primer.