For the last three days the market has had a yo-yo pattern of selling off in the morning and spending the latter part of the day trying to recover its losses.The net result has been a slight decline for the week.

Tomorrow’s price action will initially be completely dictated by a knee jerk reaction to an unpredictable employment report on a day when most traders would rather be on vacation. These are not good conditions for being able to trust a trend.

However, here are some reasons why Friday could be a trend day.

If the market turns down after the employment data, it seems unlikely that the bulls would find a need to increase their longs before the long weekend. So I wouldn’t count on this week’s yo-yo pattern to keep working.

On the bullish side, there are some interesting patterns that suggest a breakout to the upside could continue and should be followed.

Here are a few patterns to take note of that could fuel a rally if the employment data pushes the market higher.

1. The market leading SMH had a nice up move today in the face of a decent intra-day market decline. After 4 days of consolidation it has now closed over its Fed Day high which I wrote about on Tuesday.
2. None of the markets (SPY, QQQ, IWM or DIA) have traded over their prior day high this week, with one exception. This suggests that the market has been correcting enough to provide fuel for a rally. The QQQ is the exception. It closed over the prior day high today. Watch the QQQ’s closely if they trade higher again tomorrow.
3. If IBB moves higher tomorrow it will look like a double bottom (considering last week’s low) at its 50 DMA.
4. IYT showed good relative strength today, and if it trades over today’s high it will have a very explosive pattern.

4.5.Trading volume will be light so if the bulls want to push the market higher it would not be hard with a good employment report as the catalyst.

In summary, if the general markets break out over today’s highs and their 30 minute opening ranges tomorrow keep an eye on these patterns. If they all follow suit it could be a fun day for the bulls.