Normally we would have expected some selling on Friday after a large rally on Thursday. The fact that the rally continued into the close today speaks to the upside potential, I think. Markets still face some resistance next week, which may not be breached on the first try. The Qs are coming back to the January high of 46.64 while the SP500 is approaching the 50% retracement level of the decline around 1115. Once these levels are surpassed, there should be little holding the market back from a strong and sustained advance toward the April highs, if not all the way back to them.
The number of dire predictions for the stock market is about as great as I recall seeing since I have been trading. Perhap it is just that I read so many blogs and websites, but there are prognosticators of all kinds joining in on the doom and gloom predictions from notable economists, cycles analysts, financial astrologers, elliott wave technicians at all levels, and on and on it goes. They all seem to be lined up on the same side of the fence. If my recollection serves me well, in prior times of market turmoil there seemed to be some disagreement among these diverse groups. At the present it appears that most retail investors are in the bearish camp, and it just doesn't fit my contrarian sense to join in with both the retail investors and all of these market commentators. In addition, the financial news media is not exactly cheering the market on either. I don't mean that we can't see more selling, but I can't imagine that an immediate resumption of the bear market against the current sentiment backdrop will occur.
I think we will eventually see a retest, or least an attempt at one, of the 2009 lows, but it is going to be awhile. ( I think it could be as late as 2012 before the current rally tops out.) At some point between now and the end of the year, the shorts and those on the sidelines are going to be rushing into this market. Being short will be a costly position to be in.