The market did a great job making things difficult this week. Even though it was tremendously extended, and everyone knew it, the market just kept chugging higher and even had an additional push when a better-than-expected ADP number hit Thursday. That raised expectations for the monthly jobs report this morning, and we were hit with a classic "sell the news" reaction when the report didn't come close to meeting the elevated hopes.
Everything has become so extended lately that a pullback is actually a technical positive. We need to reset once in a while to encourage profit taking, shake out short-termers and rotate stock in to new hands. Consolidation is needed in order to provide a solid foundation from which we can trend higher.
The problem with this pullback is that the news that is causing it really isn't very good at all. This isn't just some minor matter that is giving those who are looking for a reason to lock in gains to do so. Today's news calls into question the entire bullish thesis for the recent move. It is pretty clear that the economic picture isn't nearly as euphoric as the market action earlier this week.