Anything is possible.

Hmmm !

Contraction or a narrower range is usually followed by higher volatility move.

Next !

In a usual situation this kind of two day rally would be followed by a consolidation period, but we are in a very different juncture here and what typically works may not be all that helpful. Keep your mind objectively focused in the now moment opportunity flow and remember, price rules over everything else in trading.

Today we had a classic bear market type activity.

Now we need to watch price to find out if the turn around rally was mostly short covering or there is some new buying in it.

History, while it does not repeat, does often rhyme

The chart above shows the market from 1/19/1906 - 9/25/1911 and from 10/9/2007 - 9/20/2011.

For more insight you can check the chart/blog from August 4, 2011. Is the history repeating ?