Jobs Report Friday Should Be Mildly Bullish – Gains Will Be Hard Fought

Posted 9:30 AM ET - Yesterday we saw follow-through buying after Janet Yellen's dovish comments on Tuesday. The SPY rallied above $205 resistance with ease and that is now a support level. Major news releases are slated tomorrow and this could be a very quiet day. The Unemployment Report is likely to come in around 200,000. That would be a Goldilocks number and it would be mildly bullish. ISM manufacturing will be posted tomorrow and it should be just shy of 50. It has been improving the last couple of months and it should not have a major market impact. Official PMI's will be consistent with the flash PMI's. However, we will get a peek at China's activity. The number will be just under 50, but it won't matter. The PBOC has been injecting liquidity like mad and a soft number would prompt further easing. The path of least resistance is up, but the headwinds are blowing as we approach the all-time high. Earnings season is a couple of weeks away and that will keep buyers engaged. The market still has a little bit of upside, but the gains will be hard fought. Support is at SPY $205 and resistance is at $207 (yesterday's high). If we get close to either extreme, I will fade the move. In other words, I will buy stocks if we are near support and I will short stocks if we are near resistance. This range will hold today and traders will wait for the releases Friday. I am seeing great opportunities on both sides of the market. Mega cap tech stocks caught a small bid this week and I will watch them closely. They are the key to the next leg of this rally. On the short side I like cyclicals. I have some bullish put spreads that I sold early in the week and time decay is already working in my favor. Look for a quiet day. The reaction to the news on Friday should be mildly bullish. . .

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