Life is always at some turning point.
-- Irwin Edman
After fighting back from weak opens the past two days, market players are gearing up to deal with this morning's jobs news. Expectations for good news are higher after a better-than-expected ADP report on Thursday, but bears will be looking to fade strength. We haven't been able to hold gains on better-than-expected monthly jobs numbers lately.
The market has been exhibiting good stickiness to the upside, which is a positive, but the buying is just strong enough to hold us steady and there aren't many signs of good leadership or momentum. Small-cap oils were a bright spot for a few days and gold managed a good bounce, but we aren't seeing any sustained action in groups like technology, retail or financials.
Some market players are hopeful that U.S. relative strength against Europe on Thursday following jobs news was an indication that maybe we'd start trading more on our own merits, but it is reckless to jump to a conclusion like that after just one day of trading. I'm sure most of us are hopeful that we don't have to continue to dance around to every piece of news out of Europe, but the issues over there are just too big to not have an impact. Maybe we'll see less sensitivity to some of the secondary matters, but the big picture there is going to continue to plague us.
At this point I'm mostly just waiting for a strong trend to develop. The current rally is looking tired, and with positive seasonality coming to an end, further upside is becoming more challenging. On the other hand, we are holding up well and there aren't any major cracks developing yet.
The action is still highly correlated and individual stock-picking is not being rewarded much. There are always a few individual stocks moving around, but they're few and far between and it is very hard for momentum players to load up on the strongest names and ride them.
A good jobs report could be the catalyst that triggers some profit-taking, especially if we gap up on the news. Next week begins earnings season, and with all the warnings in technology and retail that we've had, it may be quite bumpy if we don't have the usual supply of better-than-expected reports.
I'm not particularly bearish or bullish here, but I'm lightly invested and have not been holding trades for very long. I keep hoping we'll see some better individual stock-picking develop, but for some reason the market doesn't seem to care what I want.
We'll see what the jobs news brings and go from there. Stay open-minded and flexible and some good opportunities will develop.