Until Earnings Hit Again, We'll Have Macro Stuff

Volume was extremely light, but there was slow but steady buying all day and some nice follow-through in the price action. The indices didn't reflect it very well, but there were some very strong pockets of momentum today as the hot money tried to make up for being underinvested when we bounced yesterday. The high-beta names such as FSLR, CMG, NFLX and CRM did well, but many small-caps also were feisty, as the Russell 2000 managed to move back over its 50-day simple moving average.

The economic bulls were encouraged by the outperformance in retailers, restaurants and homebuilders today, but the jobs report tomorrow morning is going to be an interesting test for those who believe we have already fully priced in a "soft spot" for the economy. The sharp pullback in bonds is helping the economic bulls feel more comfortable as the stampede for safety loses its momentum.

Technically, the S&P 500 closed solidly over its 50-day simple moving average of 1081. That level now becomes important support. The next upside hurdle is 1100, but as long as we can hold 1081 for a while, we'll be OK. There is still some heavy lifting to do before we are back at the August highs, but some consolidation at this point would help build a nice foundation for a further upside attack.

In the future, the economic data are going to be our main catalysts until earnings season begins again in early October. Part of the reason we are bouncing is that expectations are low, but the more we bounce, the more expectations will increase, and that is what is going to make some of that overhead resistance difficult to overcome.