Bulls out pace the bears last week, as the markets bounce off lower support with price action up on the week by the Friday close from its Monday open.
The broad markets gain ground from its 3731.17 Monday open to a 3886.83 Friday close, for a 155.66 point increase on the week.
Market Cycle Volatility Trend:
As of February 2nd
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When looking at the Market Cycle Volatility Trend above, the chart shows us when the financial markets turned recently to a yellow / higher volatility state last Tuesday, February 2nd, when our Market Cycle Volatility Trend went from a prior red / down condition to now yellow, which means the markets are now in a higher volatility environment relative to recent past.
To summarize, we are currently in a higher, more volatile transitioning trend relative to its recent past. What might this be telling us, and what might be a game plan for the upcoming week?
The question now becomes:
Where might the markets go from here?
After last Mondays open, the market moved higher, and continued to do so for 4 out of 5 days, with Wednesday being the only day off for the bulls, where the close < open.
Interestingly, last week we were at or near support area. As of this weeks close, we are now near some resistance. It will be interesting to see how next week plays out, but my guess is that perhaps the markets will settle into some type of range between current support and resistance over the next several weeks.
If this premise plays out, volatility will then likely come out of the markets, giving us some consolidation for a solid move higher by the end of February.