The opening gap higher has built on its initial momentum, as shorts are being squeezed for pressing bets into the long holiday weekend. Breadth is very strong, as stocks in the red are few and far between, indicative of a market that tends to move in unison in either direction during corrective periods. I see plenty of charts that are far from set up to be high probability trades. However, they may have bottomed and are starting the process of becoming more constructive. The base building period can be a tedious one in the market, as bulls become excited at the prospect we have bottomed, only to get chopped to pieces over the following several weeks. Of course, that assumes that the broad market has actually bottomed, or that many stocks have, which is far from a sure thing.
The upside levels to observe on this bounce continue to be the low-1340′s up through 1357/8 on the S&P 500, as well as 2,900 on the Nasdaq Composite. Should this move not get faded by the early-afternoon, I may very well look at a few quick bounce ideas inside the 12631 Trading Service. Keep in mind, though, that the biggest profits with the lowest risk comes for swing traders during the healthy/trending periods in the market. For now, we remain in a correction until proven otherwise, with plenty of upside work for the bulls to do. Battling over some crumbs will have to suffice if you choose to play, which means keeping even small positions on a tight leash with a heavy portfolio cash position is still the sound approach.