Many experts threw up their hands today and declared that they did not understand the market action; I don't either, really. It wasn't a big up day, but we did finally manage two consequence positive closes for the first time since April 29. The action was chaotic and messy, particularly in oil-related stocks, but breadth improved nicely; by the finish we were moving toward 2-to-1 positive.
I suspect that the anticipation of a strong jobs report due tomorrow propelled the positive action. We are expecting the first positive report in a long time, and the numbers should be quite big due to hiring for the census. The key question is whether market players will embrace the potentially strong headlines, or dig deeper and look for reasons to pan the report.
Technically, for those that care, the S&P 500 remains right at key overhead resistance, and the reaction to the jobs report in the morning will determine where we go. We need a strong finish over 1106 to make things more appealing to the trend-following crowd. Over the past couple weeks, we have churning and consolidating action, which could provide a foundation for more upside. So far, there is little evidence of a major turn occurring.
The action tomorrow following the jobs report will tell us quite a bit about the market mood. If the bears can't convince the market that the numbers are flawed, then the bulls should have some running room. If they aren't able to run on positive headlines, we may need to make some fast defensive moves.
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