V type moves like #1 often retrace and have high failure rates. Moves from more based/rounded bottoms like #2 have much higher break-out success rates. $XME right now (#3) is very V-sh/extended, stalled near 60 resistance. Any basing (handle for the V at least) would be bullish and set this up long. However that being said the momentum is so strong right now that nothing would surprise us but at these levels we’d rather buy the pull-back than new strength.
We’ve entered a very forgiving bullish tape — Euro bailout rumors were everwhere for the October rally and yet when news came out on Thursday, it was bought. $AAPL missed. $AMZN missed. $GMCR and $NFLX massacred. Yet no one cares. Bulls are in control and it’s their game to lose.
We’re extended and for us the most bullish scenario would be just to hold the line/or even pull-back but not any further rippage, at least early in the week. And in the unlikely event the bears really start to push then the big gap to fill of course is $SPY 124.5 as the first signiciant support on daily.