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Not Much Making Traders Optimistic

Despite the two-day rally, traders remain skeptical about the markets. Will the Obama stimulus plan entice buyers? We couldn't be more oversold. Consider:

1) The S and P 500 is over 30 percent below its 200 day moving average, the worst spread since the 1930s;

2) We are at historic lows on the indices for Home builders, Insurance, and REITs;

3) The following indices are at at least 10 year lows: Banks, Retailers, Semis, Drugs.

So why aren't traders coming in Monday morning enthusiastic about the markets? Because nothing in the trading patterns make them optimistic.

Traders were dismayed to see that selling pressure actually INCREASED last week (we had two 90 percent downside days, back to back). Typically, the end of bear markets see a REDUCTION in selling pressure.

The good news is that stocks have rallied steadily since news of the Obama financial team was announced Friday afternoon. Upside volume, too, has picked up.

But the history of these rallies this year have been one of disappointment for bulls. Therefore, this two-day Obama rally is being greeted with more than a little skepticism. Rallies have been primarily used to sell into strength, and there is nothing on the horizon that indicates that is changing.

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New from CNBC.com:

- The Dow 30 at a Glance

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