Thus far it is a very interesting tape today. The moves we are seeing in agriculture, coal, steel, and other commodity related stocks is reminiscent of the moves we have grown accustomed to over the last year. Take a quick look at the $CRX (Commodity Related Equity Index).

The CRX Finds Support

At this point it is fairly early to tell, but if commodity equities are in for a reversal, we ought to complete the last shoulder of a head & shoulders pattern here. As these stocks rally, volume will be a telling indicator of whether or not that will be the case. During the final stages of this pattern volume will be greater on the declines, and weaker on the rallies. If volume gets behind this rally, which we will talk about in a second, I'd buy into this. Carefully.

CRX Rallies Off a 5 Year Trendline

Now take a stock like POT, which is still well within the context of its upward trend. Take a look at the 5 year chart..

POT Finds Support

Now zoom into the one year. After the largest sell offs, volume has typically carried the stock onward and upward. Yesterdays session brought great volume behind the buying, not to mention good follow through today.

I still think it is appropriate to get a basket of stocks that you'd want to buy, and be ready to start nibbling. I offered a load of tickers yesterday, but those were the results from only one search.

I am still watching the VIX closely. With the market sitting in oversold territory, I would prefer to see a higher VIX. Several important oscillators are reaching the lows that were created by the Bear Sterns melt-down back in March, but the VIX is nowhere near its March highs.

A VIX Analysis Shows Complacency

SPX in Oversold Territory

I'd like to see one more shoe fall before I get real bullish, but I will still nibble with a small position size in the meantime.