Significant Technical Market Support is Building

This weeks stock market rally was probably mostly short covering.  The CNBC talking heads say we are not out of the woods, more good news is needed.  That is good, remember this bounce bottom is a contrarian event. 

All that said, the technical market situation appears to be setting up to mark the end of the “bounce bottom” in stocks.  For those technically involved in the markets, the weekly MACD is set up to turn up within a few days and the trendline  of the rally highs from the January lows will be broken with a close over 1385 in the S&P 500. 

In the interim before the signal, anticipation of tomorrows employment numbers should give us a down run to the 1345 to 1350 area.  We look for dollar support to continue as recession fears move into Europe, its all relative.