We had good reason to sell off today on the weaker-than-expected jobs report, but the bulls pulled off an impressive late-day recovery. Perhaps it is the machines at work, but whatever the driving force might be, it is tough to fight it when we have those strong closes.
Technically, the S&P 500 has been struggling to make it through the June highs, and when we breached 1115, which is the 200-day simple moving average, conditions were good for the selling pressure to increase. On a slow summer Friday, it turned out to be the bears who departed early and left the market in the hands of the buyers.
What is really keeping a bid under this market is speculation that the jobs news is so bad and the economy so anemic that the Fed is going to give us another dose of stimulus. No one is quite sure what form it might take, but there is no shortage of chatter about some sort of announcement soon. With the Fed meeting taking place next week, the timing is good, but if nothing happens at that meeting, it could turn ugly very quickly.
The bulls are holding, and they have the Fed as a club to keep the bears at bay. Next week, this will play out further, and it could give us some very wild action if Ben Bernanke and his gang make a move......