For the week, investors pushed stocks 11% higher, which marks the best single-week advance in recent years. However, the stock market finished the month almost 17% lower, marking the worst monthly performance in 21 years. IBD says we are in a confirmed rally, but I'd like to see more evidence in the form of a higher high. After four consecutive higher closes and resistance just overhead, I expect a retracement early next week. A shallow retracement 38-50% would be ideal for a C&H type pattern.
The McClellan Oscillator is signaling that we are overbought. Also, note that the VIX has breached its trendline as we predicted on Thursday.
Economic calendar: Construction spending and ISM Index at 10:00.
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