After a strong bounce over the last two days, it looked like the indices were ready to rest. However, a much stronger-than-expected jobs report sent stocks up sharply.
The upward gap held all day and the opening lows were never challenged, but it was relatively flat action. Breadth was superb with around 5,700 gainers to 1,760 decliners and over 575 new 12-month highs.
The strength Friday wasn't quite enough to drive the indices to new all-time highs but the technical setup is strong and whether a breakout occurs is very likely to be a function of the China trade news. In one week we should know whether the Dec. 15 tariffs will increase as planned. If the tariffs are delayed it is highly likely there will be a move to new highs on trade optimism.
While the market will be held hostage by the trade issue, the good news is that there is plenty of interesting action in individual stocks. There is obviously some speculative appetite, which makes individual stock selection important. This is not index-driven action where everything tends to move in tandem, and that makes for better trading. This is also due in part to it being December and many investors make moves that have less to do with overall market conditions.
Next week look for the indices to dance around to trade headlines but the good jobs news and the upbeat sentiment should help to produce some strong underlying support regardless of news flow.
Have a great weekend. I'll see you on Monday.