On Thursday the market rallied as sentiment had turned overly bearish. Some argue that Thursday's rally was a thrust rally that marks the beginning of the end in the bull market we have been enjoying. Friday's lack of follow through seems to bolster that argument.
The reason that follow through is important here is it helps us determine if Thursday's rally was merely shorts covering after their stops were triggered or if there remains significant buying interest at these levels. There wasn't much buying going on Friday so we need to heed the warning here.
Trading volume is likely to be weak this week as traders start heading for the exits early to go home and enjoy the holidays. In such an environment it is best to wait and gather as much data as possible before making further decisions. That's what we suggest doing today, waiting for more data (i.e., today's trading results) before making any further moves.
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