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tdp2664 InvestorPlace Serge Berger is the head trader and investment strategist for The Steady Trader . Sign up for his free weekly newsletter . After taking a little breather on Thursday, stocks again rallied on Friday, and in the case of the S&P 500, closed the week at the highest levels in two and a half months. Last week's 6% rally has brought the index back to the top of its two-and-a-half-month trading range. If we measure the move from the May highs down to the August lows, we find that the current 1,220 area is right at the 50% retracement line. From a momentum point of view, various oscillators show that stocks could rise higher in the intermediate term and a logical first target to look for is near 1,260-1,270. It is of great importance, however, to remember that we remain in a bear market and, as such, any rally will be a bear market rally. Such rallies tend to be viciously sharp and equally volatile. Fake-out moves are a mark of bear market rallies, and trading on unconfirmed signals is incrementally more dangerous. Yes, the S&P 500 closed above the 1,220 mark on Friday but a) only moderately so, and b) still within the greater trading range. The 12% rally off the early October lows was accomplished in a short amount of time so it is certainly subject to a retracement before potentially rallying again.
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