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If the current state of the market causes you to scratch your head a bit, rest assured that you are not alone.

Six days ago, the S&P 500 finished at an all-time high. Five days ago, both the S&P and the DJIA moved to all-time highs after the opening bell rang. Then for the next two and one-half days, stocks plunged due to the air coming out of the mo-mo balloons. And then for the past two days, the S&P 500 has rallied back - and is now just a smidge away from its high-water mark.

So, the question for many is, which is it? Is this market poised to enter a bear market due to overvaluation and over exuberance in the Twitter's (TWTR), the Amazon's (AMZN) and the Yelp's (YELP) of the world? Or is it time to buy the freaking dip again?

The Bears Were Feeling It

After being shut out of the game for a very long time, our furry friends in the bear camp appeared to be "feeling it" recently. The market's negative Nancy's are adamant that the recent action in the NASDAQ, the Russell, and the Midcaps portend bad things to come. The talk is that the very same "leaders" that had helped ramp the indices to all-time highs were now busy leading to the downside.

The bears are also quick to point out that this is one of the longest bull markets in history, that margin debt is sky high, that the "Sell in May and Go Away" season is almost upon us, that earnings are limping forward, that the economy has yet to reach escape velocity, that rates have nowhere to go but up, and that mid-term election years have historically not been kind to the stock market.

But, But, But...

On the other side of the court though, the bulls will argue that the recent dance to the downside was simply a shining example how the market has become a playground for computers. In short, the bulls remind us that the algos giveth and then, every once in a while (especially when things get overdone), the computers taketh away.

Our heroes in horns contend that the advent of algo-based trend-following via ETFs causes market moves to become exaggerated in both directions. And given that the Global X Social Media Index ETF (SOCL) had fallen 20.78 percent in a month, those seeing the glass as half full suggest that the shellacking seen in the momentum names had indeed been overdone. And as such, it was time for a bounce.

BTFD Again

Anyone who has been paying attention over the past couple years knows that if you want to make money in stocks, you need to BTFD. So, with the sea of red ink seen in the mo-mo names and the S&P having "tested" key support at 1840 a couple times, it was a logical time for the dip buyers to re-enter the game.

The point is that Tuesday's bounce wasn't exactly unexpected. But then again, the initial rebound off the low wasn't very energetic either.

Up until lunchtime on Wednesday, the bounce, which some were classifying as the dead-cat variety, had been unconvincing. Volume was light, breadth was lame, and the green bars seen on the charts of the biotechs, internet and social media names were pathetic. Therefore, those traders dressed in fur felt that this time was going to be different.

There was mention of this very topic around our water cooler today (well, okay, in today's world, the water cooler has been replaced with IM and Skype sessions). The thought was that rebounds off of the declines seen over the past couple years had been backed by a fair amount of oomph (and yes, oomph is a technical term in our shop). However, so far at least, this one was very lackluster.

In fact, just after lunch yesterday, I opined that if the bulls didn't get something going soon, we just might the bears take control and push the S&P below 1840 before the closing bell.

But then the algos found something they liked - a lot.

Forget About The Darn Dots Already

If you will recall, one of the concerns after Janet Yellen's first press conference as the new Fed Chair, was that the "dot plot" (the prediction of the Fed Funds rate from each Fed Governor is plotted as a dot on a chart - see below) suggested that the FOMC might be planning to raise rates sooner than had been expected.

Although Fed Chair Yellen had strongly cautioned in her press conference against reading too much into the so-called "dot plot," the bottom line is the "dots" showed that the median target for the Federal Funds rate at year-end had increased for both 2015 and 2016.

And the bottom line is that this had been a lingering concern. Not a "major" concern, but it remained a potential worry for the markets.

The Point Is...

But when the Fed released the minutes from the March 18-19 FOMC meeting on Wednesday afternoon at 2:00 pm eastern, this concern was put to bed.

In the minutes of the meeting, there was no mention of the "dots." There was no mention of raising rates sooner. And there was no mention of the now famous definition of a "considerable period" (now understood to be about 6 months). So, it appeared that maybe, just maybe, Janet Yellen and her merry band of central bankers had actually meant what they said. Go figure.

Perhaps the key part of the report was the following:

"In the economic forecast prepared by the staff for the March FOMC meeting, real GDP growth in the first half of this year was somewhat lower than in the projection for the January meeting. The available readings on consumer spending, residential construction, and business investment pointed to less spending growth in the first quarter than the staff had previously expected. The staff's assessment was that the unusually severe winter weather could account for some, but not all, of the recent unanticipated weakness in economic activity, and the staff lowered its projection for near-term output growth."

In essence, this paragraph says that the economy still needs the Fed's help.

So there you have it. Forget about the dots. The Fed is not going to be raising rates any time soon.

The algos loved what they saw and suddenly, the vigorous bounce was "on." The question now, of course, is if it will last.

Publishing Note: I have an early meeting on Friday and will not publish a morning commentary. Have a GREAT weekend!

Turning to This Morning...

Chinese Premier Li Keqiang told markets overnight that China would not respond to temporary economic volatility with stimulus but would focus on job creation in the near-term. Asian markets apparently liked what they heard while Japan finished unchanged. Across the pond, bourses are slightly higher and here in the U.S. traders are waiting on the latest jobless claims data. U.S. futures currently point to a slightly lower open on Wall Street.

Pre-Game Indicators

Here are the Pre-Market indicators we review each morning before the opening bell...

Major Foreign Markets:

- Japan: unchanged

- Hong Kong: +1.51%

- Shanghai: +1.37%

- London: +0.34%

- Germany: +0.40%

- France: +0.16%

- Italy: +0.01%

- Spain: -0.46%

Crude Oil Futures: -$0.18 to $103.42

Gold: +$17.70 at $1333.60

Dollar: higher against the yen and pound, lower vs. euro

10-Year Bond Yield: Currently trading lower at 2.669%

Stock Futures Ahead of Open in U.S. (relative to fair value):

- S&P 500: -2.28

- Dow Jones Industrial Average: -19

- NASDAQ Composite: -4.79

Thought For The Day...What it lies in our power to do, it lies in our power not to do. -Aristotle

Positions in stocks mentioned: none

Source: Daily State Of The Markets: Like Janet Said, We Can Stop Worrying About The Dots