Phase 3 in Process

In one of our posts last week we discussed the 4 phases of a bear market bottom.  The Dow ran from roughly 7,800 to over 9,800 producing a 25% rally in the Dow in only three trading sessions, thus satisfying the Phase 2 requirement.  Currently we are in phase 3, which will lead to a pull back that gives the impression that the previous swing lows will be broken.    This market bottom is a tough one to call because the phase 2 bounce normally lasts for a few weeks and on some level will change the tone of the market.  Whereas this bounce was a large percentage move in a short period of time.  Odds are we will hold the lows from last week, but will drift sideways between 8,300 and 9,800 until the end of this month.  This bottom will be more of a rocky road and not a "V" bottom of previous bear markets.