Trading in the Stock Indices on Friday could have a major impact on the next short to intermediate term direction of the Stock Indices. Aggressive buying came into the market at the day’s low. By the end of the day, new lows collapsed. Up volume surged and market breadth expanded nicely. While one day may not end a fear driven decline, from a technical aspect, there was strength that came in driving prices much higher. So far, this move was different from the other rallies.
The beginning of the week will be extremely important. If the aggressive buying is defended on any attempt to sell off, then it will raise the probabilities we are at a possible low. However, any bad news that comes into the market will ignite that fear and we will see another move to test the lows.
In summary, while Friday gave us some good technical news, there will need to be follow through the beginning of the week. If short term support is not defended, expect a continuation of volatility and lower prices.