The initial reaction to the employment numbers gave the bears hope as stock futures collapsed, but their hopes were quickly dashed when the futures reversed to the upside. By the end of trading day the NASDAQ composite finished at 98.85% of its daily range, near the high of the day. The bears were running for cover, and the bulls were celebrating. The COMP closed up 1.69% for the day on average volume, but the spread on the candle was wide which resulted in a bullish white candle.  The sentiment had been extremely bearish going into the employment report, and the bears were caught on the wrong side of the market.  News can have a short term effect, but the underlying strength or weakness of a market will always prevail.

Does this mean the rally is back on?  Not necessarily. The Composite rallied  back to a short term resistance level around 4125 into the middle of the consolidation area.  If the bulls can power the index through this area by the close, there is a good chance that the January high will be tested.  If the bulls fail to push the index higher from here, the odds of a correction remain high.  Critical  support continues to be around 4000 for the Composite. Friday’s move had to contain a great deal of short covering by the bears. Read Full Report