Friday was a major gut-check in markets but I don’t think it was a disaster.

I’m reminded of the old adage: Bull markets go up the escalator and correct on the elevator. That means that sharp, periodic corrections are a normal part of healthy bull markets. A steady bleed lower over many days would be much more concerning.

Of course, what we’ve seen lately isn’t just a healthy bull market but a borderline mania, particularly in places like South Korea and memory stocks. There is a sense that a bubble has formed and could pop at any point.

I share the fear but picking tops and bottoms is a terrible idea. The trend is your friend and panicking after one measly selloff following an incredible month is simply poor trading.

Moreover, today we’re getting three good signs of stabilization:

1) US stock futures are now higher

S&P 500 futures are up 0.2% after falling 0.6% at the open. If you followed the weekend news in the Middle East, it was poor but Trump came in and asked Israel not to retaliate because a deal is close. The market has rallied on the same ‘deal is close’ lies for 6 weeks but maybe this is actually it? Now that sentence was painful for me to write because there’s been so much nonsense but it has worked over and over again.

2) Gold higher, USD lower

The stock move is validated by turnarounds in gold and the US dollar as well. USD was strong on Friday in the rout and climbed further at the open. That move has been reversed and now the euro is up 12 pips and the Aussie has climbed to 0.7057 from a low of 0.7019. Here’s a look at the gap lower and reversal in AUD/USD.

3) Bitcoin makes a stand

The rout in bitcoin lately has been painful. It got ugly on Friday as it cracked $60K and the lows from the start of the Iran war. It’s been a rough run lately and I don’t see many reasons to like BTC. At the same time, I can’t be the only one who sees it that way and right now it looks like there are no more sellers. I think we’ve largely passed the time when bitcoin was a very reliable indicator of risk sentiment and slightly ahead of stock markets but I think today’s price action is still positive. It’s up to $63,000.

Yes, it could be a dead-cat bounce but it’s worth watching.

This article was written by Adam Button at investinglive.com.