The above was my thought yesterday. For today, we saw a wild trading day, from 40 points plunge to 50 points moonshot at closing. This is not what we usually see when the market does not like the NFP report, either a big down day or a big up day in one direction. But today, the very hot jobs market had spooked the market so much, it plunged early today. It went down all the way to 4219 before stablishing. Then amazingly it has started a huge turnaround, jumping up relentless by 90 points to finish the day with 50 points up. This kind of gigantic reversal is not common, much rare in a supposedly bearish day. However, since the market has been beaten down so much lately and so much oversold, people were just fed up with selling; instead they started to go up. I'm sure a lot of today's up moves were due to short squeezes where a lot of people were shorting stocks in a large scale in the past two weeks but they got stuck now due to the sudden reversal and had to buy back to cover their shorts regardless of prices. Given the extend of the oversoldness and bearishness, I think there is more room to go to the upside next week. Maybe we indeed will see SPX challenge 4350 or even 4400 if the bounce has more energy to spend!
Let me be clear: I really don't think the correction has finally been over and we are seeing the start of the year end rally. Not yet to me. I think there is a high chance we will see another 4200 test when this relief rally is done. The year end rally will likely come after that!
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