Could the long, bearish drought for stocks finally be over? Maybe, at least for a while. I wouldn't dig in too deeply though. There's still some long-term technical damage that can't be swept under the rug.

Monday was a disaster for stocks, which may have been just what the doctor ordered. Though Bernanke already had a 3/4 point cut in mind, I think Monday's threat of new lows for the year basically clinched the deal in his head. Plus, with the NYSE making 764 new lows on top of the VIX surging to a 35.60, we were starting to see signs of a short-term capitulatory bottom.

S&P 500, VIX Daily


More importantly, between Bernanke and the blowout, I think there was enough fuel put in the tank to keep the market headed higher for a few more days. I caution you, however, against thinking the worst is over in the long term.

S&P 500 Weekly


At first glance, it might just appear to be an ordinary corrective move. Now with that out of the way, the market is primed to recover. Onward and upward, right? Before you join the ranks in the bullish march, let me offer this dose of reality. Remember 2000, 2001, and 2002? I remember them all too well. I remember them even more vividly now, because I'm hearing some of the same things now I was hearing then.

Specifically, it just seemed like every time we saw the market make a big pullback in the prior bear market and made a blowout bottom, the majority of the market assumed the worst was over and a recovery was underway. Unfortunately, the recoveries were much smaller than the pullbacks.

Take a look at the S&P 500 between 2000 and 2002. See anything familiar?

S&P 500, 2000-2002 Weekly


In the last bear market, we saw five distinct pullbacks of 15% or more. They were interrupted by some pretty good rebounds, but none of those rebounds offset the loss taken just before.

Yet, I can recall very legitimate opinions being voiced at each of those bottoms about how the worst was over, and a recovery was imminent. My point is, don't assume any Bernanke-inspired strength is going to have real longevity. It might, but I'm not counting on it. I'm just too cognizant of how the 2000/2002 bear market proceeded.

By the way, the "damage" is rooted in the 200-day line. We're well under it now. In fact, we're as far under it as we've been since...you got it, 2002.

S&P 500, with 200-day line, Weekly


Yes, things are much different now than they were between 2003 and 2007.

Price Headley is the founder and chief analyst of BigTrends.com.