sp'weekly7 - near term outlook
sp'daily3 - fib levels
Summary
Today was especially interesting to have watched. It was arguably a reversal day for many stocks and ETFs, and there are bullish engulfing candles all over the place.
The bulls should be seeking confirmation of an index turn tomorrow, and that IS indeed the issue. The fact we have the big monthly jobs data is ironically perhaps a good thing for the bulls. As is always the case, is it not so much the number that matters, but whether the market interprets the data to be good or bad.
After today's price action - especially in the late afternoon, I would be surprised if we don't see some significant follow through to the upside.
In terms of price levels, there is key resistance around sp'1635/40. Any opening gap over that level, and the bears are going to have a really bad day, and we might even close in the 1650s.
Of course, if the jobs data is perceived as bad, then all of today's reversal could be cancelled out. However, the charts say...no. We're more likely headed up than down, not least after what was a considerable (89pt fall) 11 day down cycle.
New highs..or lower high?
That is the big question now for the next up cycle. Do we break above the Bernanke 1687 high, and push into the 1700s...or do we get stuck somewhere between 1660/80s ?
The break in the transports weekly chart has really swayed me to assuming the market will put in its first lower high. Yet the daily fib' chart is now offering the 1740s by late July. Anyway..one day at a time.
Looking ahead
The market is seeking job gains of 167k, with a static headline rate of 7.5% That doesn't seem too bold a target, and it'd not surprise me if we see somewhere in the 190/210k range.
All things considered, I'm expecting the market to see some follow through to the upside after today's reversal. A 1% gap higher is very possible, that will get us almost to the sp'1640s. A little melt across the day, and some short-covering, and a close as high as 1645/50 is viable.
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*Something to keep in mind, there is no significant QE-pomo for the next FOUR trading days.
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Goodnight from London