The Dow Jones Industrial Average jumped almost 3% yesterday and in one week gained over 1,000 points. Yesterday’s explosive run from the gate was attributed to France and Germany’s willingness to support a plan to recapitalize European banks that needed help. But specifics were lacking as the two European powers only said that they would bring a “comprehensive package” by the end of October.

And technically there was something lacking in yesterday’s jump — volume. The NYSE traded just 888 million shares while the Nasdaq crossed 440 million shares. But breadth was strong with advancers over decliners on the Big Board over 7-to-1 and just under 5-to-1 on the Nasdaq. It was reported that holidays in various countries caused the low volume.

In just five days, the S&P 500 has jumped 120 points (12.3%). Even though it’s shocking to those who are short, it should be no surprise to experienced traders since bear market rallies are famous for their stunning reversals. The question is where will it grind to a halt? It has already taken out the immediate resistance at the 20-day and 50-day moving averages and the midpoint resistance at 1,170.

The next major resistance is at the top of the bearish flag’s consolidation between 1,220 and 1,230, which at 1,225 would represent a 50% correction from the March high to the recent low. But the most daunting resistance is at the neckline break at 1,260, which is a Fibonacci 61.8% retracement.

Bear market rebounds are among the most difficult to predict since so much emotion rides with each advance. Buyers become excited, rushing in to buy before they miss the boat, while short sellers cover in panic fearing that their hard-won gains may turn to losses — many have already.

But if in doubt about the major trend of the market, just step back and look at the chart — clearly a sharp decline is in progress on all of the indices. The current advance will no doubt end just as quickly and ruthlessly as it started. The key to the current advance will be clear from the volume in normal days. It is again time to wait out the market until the buyers run out of steam or to use options to capitalize on the next major move.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.