Friday we finished the week on a positive note in spite of a substantially weak jobs report. Economic data last week was generally awful, and it was also reported that we've been in a recession for a year. The headlines are all negative, yet the market seemed to hold its own after Monday's sell-off. This suggests a change in character. I do not expect the market to shoot straight up from here due to the magnitude of the decline over the last year. The market needs time to make a base, but this base can be made with an upward bias.
A look at the charts of the major averages suggest that we could get a nice upside breakout, and there is no better time to do that than on a Monday. When the market has a bullish undertone, Monday's tend to be nice upside days. Considering the resistance levels lined up just over Friday's close, a lot of stops to cover short positions could be triggered on any strength in the market in the next couple of days. With that in mind, day traders should be aware of these factors heading into the trading week.
Scott Cole
www.bestdaytradingstocks.com
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