Markets rebounded on Friday as short term/momentum cycles rose from an anticipated bounce out of their lower reversal zone. Resistance on the NASDAQ's 5 day average halted its rally right at that line, while both the Dow and S&P easily broke back above their 5 DMA.
Breadth numbers were mixed however. The number of stocks trading above their 20 DMA improved to 46%, but the number of new highs continued to shrink, closing at 107:30 over new lows.
The more volatile action we seen over recent sessions is not unexpected. There is almost always a similar choppy, topping pattern when intermediate term cycles peak. Those peaks typically coincide with the 39/64 day cycle tops, but are rarely singular. Bullishness is much slower to resolve than is bearishness and there are often multiple attempts at new highs before intermediate cycles finally turn downward.
On Friday, momentum cycles moved all the way back into the upper reversal zone, and with resistance at the NASDAQ's 5 DMA, expect markets to struggle in the upward follow through today. Continue to keep stops below the 14/21 DMA's on intermediate term long trades(DDM, QLD, SSO), and layered below the 30 and 50 DMA's for longer term holdings.