Weekly Commentary

(Editors Note: this was from late Thursday night before the jobs report last Friday)

The stock market has run into a little trouble this week. Things started
out well enough, with a strong rally on Monday taking $SPX to new
post-2008 highs. However, selling has commenced since then, fueled by

several factors: an overbought condition, more poor news out of Europe

(concerning Spain), the FOMC minutes which were released on Tuesday

and appeared to indicate that the Fed is not planning on any quantitative

easing in the near future, and now the Unemployment Report.

The chart of $SPX has held above support, and that is arguably
the most important thing that can be said. There is a strong support
area at 1385-1390.

Equity-only put-call ratios are bullish at this time.

Market breadth (advances minus declines) has been lackluster for some

time now. The breadth indicators rolled over to sell signals this week.

Volatility continues to be a very interesting indicator. If $VIX were to close

above 17 and trend higher, then that would be bearish for stocks.

In summary, we remain bullish as long as $SPX holds above
support. However, the market reaction to the jobs report is likely
to push $SPX below support. If it closes there, that would be bearish.

Larry McMillan