Despite the drama over the rather poor jobs report this morning, it ended up being a very boring day of trading. The indices were up a minor amount, but breadth was negative and volume very light.
A number of bulls were encouraged by the action and argued that if the bears couldn't pressure the market more given the poor jobs data, particularly the 10.2% unemployment rate, then they obviously have little firepower. In view of how the market has had a tendency for many months to keep on going once it starts to bounce back up, it is difficult to dismiss the optimistic spin on the action.
The bears, on the other hand, argue that the market has bounced back five days in a row and is now running into overhead resistance. While the bulls did a nice job of holding things up today, there is formidable overhead resistance nearby, and the chances of another gravity-defying V-shaped move straight back up are declining.
If the bears are going to make a move, this is a very favorable setup for them right now. We have nothing much more than an oversold bounce back to resistance, and if we are going to stall out and roll over again, this is the point where it will happen. This is a market that hasn't respected those sorts of technical setups in a while, but that doesn't mean we should ignore them. We held up well today.
Next week should be a very interesting contest and should give us some good insight into how things will play out as the year winds down......