Whoopee. Don't Get All Excited About a Rally

Hoo-hah! Or should we say Yahoo! (YHOO Quote - Cramer on YHOO - Stock Picks)? Or maybe we ought to cheer, "Go Motorola (MOT Quote - Cramer on MOT - Stock Picks)!"

If Wednesday's lack of downside followed by the better-than-expected news after the bell doesn't make this market rally, then nothing will. Can we make a case for a rally? Yes. Can we make a case for a good rally? No.

As you might already know, the charts of the big three averages all held at trend lines. The recent chatter about Latin America's problems also gives folks a reason to turn their sentiment from bullish to bearish after several big down days, thus helping to create too much short-term negativity. Given all that, it makes sense for the market to rally.

Why do I sound so cynical about this "great" news and "great" low that everyone is talking about? Well, the market's breadth Wednesday was nothing to write home about, despite the averages' holding. Breadth was quite negative on both exchanges. That normally wouldn't concern me if the market had a late-day rally, but it does worry me because the big three averages made their daily lows quite early. Breadth had all day to get back to an even level or head to positive, yet it didn't. It stayed rather negative all day.

Of course, we might point to the lousy action in the financials for that lack of breadth, but the New York Financial Index was down only a smidge. Therefore, the poor breadth was more widespread than just the financials.

As I believe breadth has been a key indicator to this market, I'll continue to be cynical about such rallies until they're accompanied by better breadth statistics.

Overbought/Oversold Oscillators

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