What to make of this market?

As of writing the DOW-30 is up just shy of 300 points and about 4% higher than the close on Monday, Nov 25. Does this imply that we have seen a bottom? The talking heads have declared that we have seen a 10% move lower in the indexes and now we can get back to our raging bull. I take caution to this. Why is 10% the amount markets need to correct to shake off excess, etc? By trade I use technical analysis in making investment decisions. This includes support, resistance, moving averages, and some various other indicators to help me decide to pull the trigger. What really matters is what happens after I initiate a position. This is what really matters, how you get in a position is meaningless (be it technical analysis, fundamental analysis, or throwing darts at the quotes of the Wall Street Journal). Positions must be entered in a favorable risk to reward ratio. I am willing to give up X dollars in expectations of Y returns. The way I see it currently is there is little more upside potential to be gained versus the likely hood of the markets being at some sort of intermediate top. I could be wrong and the markets might continue higher, I don't know. What I do know is the probabilities and the amount of money I am willing to risk on my decision. Below is what my favorite Blogger, Barry Ritholtz, has to say, via his Blog, The Big Picture.

Market's Back-to-Back Streak

Wednesday, November 28, 2007 | 01:00 PM

Well, the Christmas Rally we discussed on Monday and Tuesday has finally arrived.

Indeed, like the NY Knicks, the Markets have finally pieced together two consecutive winning days.

Since the decline that began on October 30th, the S&P 500 has gone 19 days without having more than one winning session in a row.

I have been following this ever since my friend Paul first asked about what the failure to have two consecutive back-to-back winning days actually means. I was speaking with Mike Panzner about this earlier in the week. Mike noted:

• The longest such streak (since 1999) was the 24-day run that ended on 9/21/01. The second longest streak was 22 days, which ended on 3/21/01. There have been two other streaks of 21 days each, ending on 10/3/00 and 4/29/02, respectively.

• Except for the post 9/11 streak, which marked a climactic V-bottom low in the equity market, other spans seemed to define the first leg of a downdraft that "paused" for anywhere between 4 and 14 days before it resumed.

• Visually speaking, the pattern that developed when those prior one-day-wonder streaks ended was a "flag," which in technical analysis terms, often implies that a move -- in this case, the downtrend -- is about half-way over.

• For what it's worth, the same also holds true for the two shorter streaks of 16 days that ended on 1/28/03 and 4/1/05, respectively.

• Based on past history, then, it seems that once the current streak ends ( i.e., we see two or more winning sessions in a row), the risk is that it won't be long before the market begins another push lower.

I would add one item to Mike's comments: The wild swings in the markets, +/- 2%, with violent up 200 or 300 point days don't typically come in healthy Bull markets -- these spasms are symbolic of Bear markets.