US stocks, led by technology, bounced back with some vigor in early Monday trading after closing the prior week with the biggest single-day sell-off in almost 3 months. Most forecasters, including yours truly, expected a weak open. Weekend Wall Street Journal readers were widely expected to be spooked by Friday’s broad losses of over 2% and sell some shares ASAP. Europe and Asia sold-off the night before, leaving futures down until less than an hour before US markets began trading.

Anyone who bought the pullback Friday had their sentiments justified by Monday’s early action and those who shorted Friday’s sell-off without die-hard conviction were forced to cover. Right or wrong, the weak hands are back to long stocks.

Any chatter of “a rate hike is now on the table” based on Friday’s action has been rebutted. The Elliott Wave guys have been calling for S&P 2300+ sooner rather than later, a massive consensus exists that the market cannot enter bear territory shortly before an election and, as I’ve discussed recently, markets have shrugged off all sorts of bad news for the last 7 years; leaving an overwhelming sense of complacency and the expectation for stocks to continue to trickle up.

Friday’s sell-off was not the sharp opening blow that can reasonably be attributed to North Korea’s nuke party. It was methodical and endless. Monday’s snap back happened too soon for bulls to argue selling has capitulated. Furthermore, risk currencies and commodities failed to participate. The move in stocks can be described as a retracement. Expect a wild week with increasing volatility. The two most likely outcomes are:

1. A close to the week far worse than last, the Fed cannot raise rates and markets muddle along while gold rallies hard.

2. A flat week with high-volume selloffs and low volume rallies, the Fed raises rates next week and stocks crash.

Sentiment became increasingly bullish last week as share prices declined, and many investors now feel like they’re running with the bulls in the streets of Madrid after buying Friday’s sell-off. Chasing stocks at these levels is unwarranted, as better, if not much better, opportunities to go long lie around the corner.