Market Outlook for Thursday

Yesterday's action looks strong by the usual breadth measures. The total put/call ratio has not spiked too much, a healthy development for the move up:

The current level, around 0.8, does not mean overbought anymore like it did in September. The fact that the overbought level is moving higher is another indication that we are in a bull market.

Usually, after big trend days the market oscillates in the next session and confines itself to a much smaller daily range. I think this will be the case today also and this is why I expect the probable initial gap up to fail. A sell off to the overnight lows would not be a surprise. The bulls may also be prudent since tomorrow is an employment report day.