A guru's take on yesterday's rally

The following is what Real money's commentator Dick Arms thinks of the rally, "coming to Friday's market last week, we had seen four up days, but the rally looked suspect because of the low volume and the still-overbought Arms Index numbers. But the selling on Friday and Monday produced high-enough daily Arms Index values to push the 10-day moving average to its most oversold level in about two months. Tuesday, the markets staged a very impressive one-day reversal as they tested and bounced off the January lows again. Volume was a bit better on the reversal. The Arms Index numbers remain oversold for the 10-day moving average. This looks as though it may be the beginning of a rally. On a cyclical basis, as I showed last week, a low is due in this vicinity. This may be the start of a turn to the upside. The cycles recently have had a wavelength of about two months, trough to trough, and the moves in each direction have been in the neighborhood of 300 to 400 Dow points. On that basis we might project a rise to around 10,800 over the next few weeks. The real key will be a breaking of last week's highs on good volume. I think, though, the likelihood is good enough to justify some buying in here. We have ridden the whole decline down, resisting the impulse, until now, to buy. I now am more aggressive than I have been in well over a month".