The primary issue on the minds of market players is whether this fast and furious uptrend can persist. There is much debate over whether this is just a bear market bounce or a significant market bottom, but in the short term, that isn't an important issue. It will take weeks and higher levels of volatility before that issue even comes into play.
The immediate market concern is the July employment news that will be released at 8.30 am ET here on Friday. This news is going to have a direct impact on the issue of whether the Fed can engineer a soft economic landing as it brings inflation under control.
If unemployment starts to rise, it will be an indication that Fed policies are starting to slow the economy and that inflation has peaked, but the worry is that the downside momentum means a recession is coming. The Fed is desperate to stay ahead of the curve and kill inflation, and many economists believe the only way it will be able to do that is by causing higher levels of unemployment and a recession.
If the jobs reports come in hot this morning, then the bullish spin will be that the economy is still very strong and inflation is coming down anyway.
If the jobs report comes in soft, then the bullish spin is that the Fed policies are working, the economy is already cooling off and the Fed will not need to stay hawkish into next year.
This may be a case of all news is good news as market participants have been on a rampage lately and are looking for reasons to continue their buying. This big move has created many underinvested bulls and squeezed bears and produced significant fear of missing out. There will be a strong inclination to buy dips in order to not miss out on more upside. If the jobs report sees a negative response, then there is a good possibility that dip buyers may quickly show up.
This market and many stocks are extended and need more consolidation or pullbacks, but the flow of funds and the worry that a bull market may have already started are driving buyers. The jobs report may turn out to be justification for even more of the buying they already want to do.