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Markets Get an Easter Sugar Rush

"Dead cat bounce" or "relief rally," call it what you will, the tone in equity markets Tuesday morning has been somewhat different to much of the first quarter. Sustainability, though, is the issue. Until indexes can demonstrate some sequential daily gains, there will remain a question about the resilience of the upside.

Did you see it? The good news that turned market sentiment, I mean. No? Me neither. There was some slightly better-than-expected housing data, and of course Bear Stearns' equity holders pushed for a keener bargain from JPMorgan . That now has the market refocused on the value of banks. But, beyond that, there wasn't anything really solid, that you could hang your hat on.

That's why there is a good measure of doubt about this being a true turn. Sure, central banks appear to have stepped up their commitment to clearing the logjam of debt -- but have we reached a point where the market no longer expects further writedowns from financials? The market has still not been disabused of the notion that the mortgage-related credit squeeze won't bleed into other types of credit, be it car loans, credit cards or counterparty risk in the credit default swap market.

So how do you work this rally or similar bounces? Our chart reader, Roelof Van den Akker, analyzed the Dow, the Dax and Gold this morning. His line was that both of the equity indexes are poised for further downside, while gold should make $1150, before heading on to $1500. That is his medium- to long-term target. If he is right, investors would do well to consider selling into the rallies ... and wait for a better opportunity to buy back in.

Look for confirmation either way in the techs and financials. The semiconductor sub-indexes have been looking more promising in recent sessions. It'll be these sectors that will benefit from a prolonged rotation out of commodities and bonds.

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