Farley: Wait for Proof of Turnaround

We've suffered through a curious bout of bottom-calling in the last six weeks, but price action still doesn't point to the final demise of this bear market. The S&P 500 index has risen just 6.8% through the period, a feeble uptick compared to the 13.1% recovery during an identical number of trading days after the Bear Stearns low in March.

It's even worse on the Nasdaq 100 (NDX), which posted nearly 20% gains after the March low. This time around, it's barely scraped together a 6.5% rally. The performance alignment between this index and the S&P 500 exposes yet another weakness in this recovery attempt. Neither average has taken firm hold of the leadership reins.

The lack of strong and consistent leadership is the main reason we're stuck firmly in the first bear market since 2002. Sadly, market players don't seem too interested in blue-chip or big-cap tech stocks right now. Instead, they've turned their attention to beaten-down sectors that posted the most frightening losses after the October 2007 top.

It's good news that banks, brokers and homebuilders have jumped sharply in the last six weeks, but as counterintuitive as it may sound, these noxious groups can't lead the broad market to higher ground. This type of heavy lifting has to come from the core constituencies that historically fill the majority of long-term portfolios.