Market Montage

After the large gap down the indexes have fought back nicely, after all it's a Tuesday.  But on a serious note we have a very strong support level at 1622-1623; since May 8 this has held as a bottom 7 different days.  Of course that broke briefly last week but by and large it's been a very strong level.   If you are bullish here you can say we are forming an …

Bears have been hammered over their heads constantly during periods of QE with the infamous "V shaped" rallies; that is a turn on a time out of a downturn and rocket ship rally with no relent.  It is not normal in the context of how things worked pre-2009 when V shaped rallies were the exception not the rule.   So at this point one has to almost expect that is what will happen, and when it does not it is the shock – not vice versa.  It does appear this will be …

While the corrections since 2009 have come in all shapes and sizes, the rallies have almost all taken almost an identical shape… that of the now infamous "V shape" bounce.  Once the Fed induced market begins to go, it just goes and does not act like it used to, backing and filling, going sideways for long periods of times, etc.  So during each correction one must constantly be thinking of when the 180 degree turn happens because that is how they happen nowadays.

Looking at the S&P 500 chart without any squiggly lines we can see the 50 day moving average has …

A lot of volatility this week, and essentially the 4th test of the 50 day moving average (blue arrows) since this long winded rally begun.  After all the movement,the S&P 500 is back to where it closed Monday.   After the move the past day and a half a lot of the short term oversold indicators should be worked off and the more interesting part of the action begins.  The only question from here as we approach next week is:  stall or V shape bounce?  Should know in the next 10-15 points.

Not too hot… not too cold.  Just "meh" enough to keep Benjamin around.  Jobs gained +175,000 but unemployment rate UP 0.1% to 7.6% taking the U.S. farther away from the 6.5% level – what more could a person ask for.   Private sector +178K, govt -3K.  Labor force participation rate up a tick to 63.4%.  Quality of jobs?  Meh.

• Temp services +28K
• Bars/Restaurants +38K
• Retail +28K
• Healthcare +11K (lots of that is the "home healthcare" or "assisted living" sort of thing)

The data doesn't matter that much here in terms of the market.  We came in quite oversold and the market "approves" of this number.  More important is how quickly we shall be running into resistancee of the downward channel the S&P 500 has been in the past 3 weeks.  To that end… see the 1640-1645 level:

If bulls can pop up and out of the other side of this channel in blue you have the potential for… the "V shaped bounce" yet again.  If not, it will be a big change in character for 2013.

Full report here.