The market struggled with economic news on Thursday, but bounced on some slightly dovish comments from non-voting Fed member, James Bullard of St. Louis, and managed to hold essential support levels for now.
The main economic issue right now is strength in the jobs market. Job openings remain strong, and the number of folks filing for unemployment declined. There has been a slight slowing in wage hikes, but while other areas of the economy, like housing and the consumer price index, are failing, job demand is not.
The December jobs news will be released Friday at 8:30 a.m. ET. If this is stronger than expected, then there is a very good likelihood that the S&P 500 will fail to hold the key support at around 3800. The Nasdaq and Nasdaq 100 will also be in position to test the lows of the year that were hit back in October.
This is not an attractive setup right now. There are some very obvious economic concerns, there are poor technical conditions, and we haven't really seen the sort of sharp selloffs that lead to big counter-trend bounces. Earnings season is arriving soon, and when companies like Salesforce (CRM) and Amazon (AMZN) are announcing layoffs, there is a good likelihood that the reports may not be so great.
We'll see what happens on the jobs report on Friday, but the market is being magnetized to retest those lows, and it is going to take a steady diet of positive news and strong buying to avoid more downside.
Have a good evening. I'll see you tomorrow.
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