Friday's strong rally on strong breadth and internals after getting so-so news on the US job market was very bullish. All the indicators and reactions in the past several months point towards Friday's big rally being the beginning of a larger rally that should last for days or weeks. So new highs are quite possible. The only that gives me pause in completely abandoning the short term bearish call is the fact that it was a trading day prior to a long holiday weekend and the rally was done on very very light volume. However, the Asian and European markets rallied hard on Monday and US futures are up fairly big. This is not the type of reaction I'd expect if the mass of traders were bearish and didn't agree with the rally on Friday. It tells me the masses agree with the rally and think the market should move higher. And the fact that so many people are coming back from taking time off for the holiday, it means that this market can really soar a lot higher this week.
The first hour of trading Tuesday morning will tell us a lot. If the market just comes out of the gate rallying and continues throughout the morning on strong volume and breadth, then we will know that wave 3 most likely is not underway yet, and we'll have to wait just a little longer for it to begin.
I still have all my same positions.
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