Since the Dow dropped more than 500 points Thursday the next round of commentary will probably be that today is a “Capitulation” Day. That implies that the market has bottomed and that now is a good time to buy stocks. In my opinion, that’s completely wrong. The market is building momentum to the downside. It’s pretty hard to stop a train going 100 miles per hour.

Flash Player 9 or higher is required to view the chart

Click here to download Flash Player now

The market may have a reactionary bounce from here; after all, look at all those “great values.” But will it be meaningful and lasting? How often have investors started initiating positions and been burned just a few days later?

A number of factors still have me doubtful that we will get a significant uptrend soon. This cycle started back in March of 2009, so we are late in the cycle. About 60 percent of the leaders since the beginning of the cycle are broken. The last dozen of the very best are pulling back into their 50 day moving averages…again.

In fact, this reminds me of the kinds of stock chart patterns we were seeing in the first failed rally attempt during the summer last year. You usually don’t begin a real rally without at least decent looking patterns from numerous market leaders, not defensive stocks. Earnings and sponsorship look good, but those are lagging indicators that tend to look best at the top.

Look at the last two earnings seasons and how weak the market reaction was to such strong numbers.

Finally, I still believe it will be tough to gain traction without resolving the numerous domestic and international issues lingering over the market (“Is the Bull Market Topping? ”). The odds are that the inevitable reactionary bounce is a short reprieve on the way further down.

Special Offer: Curtis Hesler recommended Silver Wheaton (SLW) at $8. The stock now trades above $35. His readers have also been in gold all the way from $250 to $1,600. Is Hesler still bullish on either metal? Click here for important portfolio updates in Professional Timing Service .

If the capitulation results in a new and meaningful uptrend (and that is a big “if”), we will see that in the charts. Sitting on the sidelines does not mean we will tune out and miss the next rally. That’s why we are always on the lookout for new rallies to begin, and we wait for confirmation on or after the fourth day of the start of a new rally. We are looking for the rally to prove itself. The idea is to give up the first few points as a confirmation of strength that the rally is real.

If you are trying to pick a bottom here, take a look at past cycles and see how successful you’ve been at that game. A few may make it work but ask yourself, what you are trying to gain? A few points here and there? Or are you trying to build a portfolio of the best stocks that will result in a substantial year?