Bulls got their reward with the Nasdaq popping higher following a series of inside days. The coiling action brought about by recent action delivered over a 1% gain. Volume climbed to register an accumulation day. In addition, the post-jobs report breakdown gap was closed, turning the decline into a brief consolidation. A challenge on 5,288 is next.

The day started with bulls enjoying a positive start, but much of these gains were clawed back by the close. The Nasdaq had the best of the action, doing enough to finish above yesterday's close - but not enough to finish at the day's highs. Instead, Tech averages left an 'inverse hammer' in what is looking like committed bearish action.

After yesterday's blast, bears took another chunk out of the recovery. Bulls might actually get more joy with a small position at the lows of the last three days in Large Caps. Pre-market action will be key; should it look like the market will open below the 3-day low then there could be a runaway lower. In such case, waiting for things to settle after the first 30 minutes of opening trading may offer a better entry.

After weeks (and weeks) of inactivity, markets have delivered two big days of activity: Friday's sell off and today's recovery. Which of these days delivers the basis for market action over the next few months remains to be seen. One could argue today's lighter volume and inability to recover all of Friday's losses gives bears the edge, but the longer term trend is all bullish. I am biased by holding a Dow Jones short, but intermediate term technicals have turned bearish for both S&P and Dow. The rally in the S&P stalled out at the 50-day MA. The index has underperformed since July and Friday's gain only made modest in roads into returning to a leadership role.