The last couple weeks in the markets have been interesting. Specifically, there are a few changes going on behind the scenes that indicate stocks may be in their final leg down of this bear market.

First, the Nasdaq is neither gaining NOR losing ground relative to the NYSE (the rest of the market). I find this to be encouraging as this tells me the relentless selling of technology stocks seems to be slowing down. As we already know, the technology sector tends to lead the markets so we should be on the look out for another pending rally in stocks. Yes, the Nasdaq, as a composite index is off –6.7% since the beginning of July but recent activity suggests that strong selling days like yesterday are now met with equally strong up days.

Second, I am encouraged that a few big name stocks have been able to meet or beat earnings expectations for the second quarter. This is by no means a signal to load up on these stocks. I am simply hopeful that the steep decline in corporate earnings is easing a bit. I would still be very surprised if the US economy escapes a formal recession before this is all over. Remember the first “Recession” headlines typically mark the beginning of a new bull market so keep you eye on the magazines at your local grocery store.

Finally, the decline in the markets since the middle of June has been somewhat mild, relative to the sharp losses of February and most of last year. A healthy market will advance (rally) and then consolidate those gains. A typical consolidation might see prices pullback up to 50% of the previous advance. The S&P 500 is within 1% of that mark as of yesterday’s close based on the advance that began April 4th (See chart-o-the-week).