So, a nice comeback by the bulls dear readers. You can kick a guy down only so much before he shows at least signs of some sort of fight! Whether this fightback is feeble or actually a solid comeback, that only time will tell. Only way we can "predict" (being a firm believer in TA, I don't want to use the word guess but in this news driven market, guess probably makes as much sense as predict) is by looking at the charts, so lets have a look at the charts for both S&P and NASDAQ. Since both the charts are very similar for the purpose of our musings, I am going to talk only about the S&P.
First thing that should strike you dear readers is the low volume today on both of the charts. It makes sense as both Thursday and Friday were, to a large extent, driven by panic. I am guessing you really profited from the rally today only if you went long on Friday evening as the markets gapped up and stayed up. The S&P closed above 1150 today, a very important level of support. I would recommend keeping a close eye on this level tomorrow dear readers, because if this breaks dear readers, I see another retest of MA(200) coming up. As for the next resistance level, there is MA(50) looking down at us right above at 1171 levels. I have my doubts if we can break this level that easily. For what its worth in these news driven markets, I see us trading in a range between MA(50) and MA(200), indicated by the green box, for the considerable future. So, in a nutshell, those are the levels to watch out for S&P dear readers - 1150, MA(200) and MA(50). You will find similar levels are at play even at NASDAQ.
I still believe that a considerable cash position is a must here irrespective of whether you are leaning bullish or bearish. Take care and good luck!