Going into Friday’s trading, there were inter-market divergences and internal divergences suggesting the rally off the recent lows was weakening. Often times a news event will change the perception of value on the part of traders and investors. This will result in the elimination of those divergences and the internals will strengthen to support a continuation of the price move. That is exactly what occurred on Friday with the release of the employment numbers.
While the Indices finished the week with stronger internals, they were at a point of being overbought. Therefore, unless there is some negative news that hits the market the first of the week, I have to anticipate the possibility of some type of short-term pause to work off the overbought condition. That does not preclude that pause from putting in a slight new high above Friday’s. It simply means a day of rotation.
The Briefing outlines very important short to intermediate support levels. If those were to be traded through, it would suggest everything that has occurred through Friday is a false breakout.