You may not gain anything even though you know the direction of the market.

Stocks bolted higher after a volatile session Friday. A better-than-expected reading in Q2 GDP growth, although slower than in the first quarter, boosted equities early on, but things took a turn for the worse after Fed Chaiman expressed concern over the weakening economic recovery, also Intel's revenue warning added to worries. Still, stocks found their footing shortly after 35 minutes trading and spent the rest of the session working higher.

The market is oversold and it is starving for something decent to look at. Once again, technical analysis and charts seem to be the most dependable day trading tools. They filter the noise from the news and reports.

I mention yesterday that market might go through a wash out today. And I also reminded my readers to grab this day trade opportunity to buy at the low when all the reports came out with an extreme sell off mode. Believe it or not, I didn't long any stock today, actually I didn't enter any trade today because I was sleeping when the action is happened.

I woke up an hour after market opened and SPX was rebounded from the low of 1039.7 to 1053. I talked to myself, "Oh! my god, I miss 13 points of the run?!" Market was overbought at that moment, I had to wait for the market retraced. The first leg up 1040-1055, +15 points. When you see market rebound so strong with first leg up 15 points, you need to catch the retracement level at 23.6%, or 38.2% instead of 50%. I put my buy limited order at 1049.27 which is 38.2% RT, Unfortunately, market only went down to 1051.46 which is the 23.6% RT and rebound. I missed the first golden opportunity to enter today's rally.

I missed the second entry point when market topped out at 1060 and retracted. It was 20 points run from the low 1040 to the high 1060. I placed a buy limit order at 1052.36 which is the 38.2% RT. Again, market was so bullish that it rebounded at 23.6% RT 1055.28.

Today is one of the day bulls and bears draw a very clear line. If you don't long today's market, you had better step aside. There is no way you can short a market like this strong. You can always tell how strong is the market in one day by reading the first leg rebound from the oversold low. Like today, 1040 to 1055, +15 points. By the first leg rally we can make a projection for this run. They are 1065, 1070, 1076, 1079, 1085, 1094. The first target was hit at 1065, which is the 61.8% of the first leg, not even 100% of the first leg which is 1070. I can't see any difficulty for market to hit 1070 and fill the gap few days ago.

In the meantime traders are in a dilemma. The action we saw today was a bullish sign and a reverse day is prerequisite for a bottom. Nevertheless, if you look at the daily chart, you will see that the waves count for this downtrend started on August is not finished yet. We got only two waves down, that mean the rally we are seeing now is the fourth wave, we need one more leg down to finish the 5th wave. Therefore I will give a reasonable doubt to today's rally. I would like to see SPX retest 1010 low and rebound to confirm this short term bottom.