Much as I distrust the stock market’s buoyancy this week, I have to go with ‘technicals’ that suggest at least a small rally is coming on Friday. The pattern shown yielded a quintessentially ‘counterintuitive’ buy signal at the green line, then a belated opportunity to get long ‘mechanically’ on the pullback to the green line today. If I were analyzing this chart in a vacuum, with no biases or an inkling of what was going on in the real world, I’d rate the 2168.50 target a lock-up. Even so, as I’ve implied in the current The Morning Line, you should not let a strong close induce you to take a long position over the weekend. This advice comes straight from the gut, but I will feel no embarrassment if stocks come charging out of the gate on Monday._______UPDATE (Oct 7, 7:18 a.m. ET): The futures stopped out buyers of a promising pattern once overnight and are setting up to do it again with a move below 2148.00. This suggests weakness will finish out the week, although it would be extremely unusual for any selling to pick up steam during the day. In any event, bears shouldn’t get their hopes too high.
