The ability of the media to weave together news and the markets has a strange inverted genius to it. If ES has risen strongly on the decent NFP number this morning then the explanation would have been that the market was responding to the increasing strength of the US economy. As ES has fallen instead the explanation will be that the increasing strength of the US economy is making further QE less likely and bringing forward the prospect of increasing interest rates. We should never underestimate the power of a good rationalization:
Personally I wonder whether the news was actually important here at all, as a retest of Wednesday’s low was always a strong possibility. The bear scenario requires it to complete and test the H&S targeting the 2055 area on a break below Wednesday’s lows. The bulls need it to set up a double bottom that would target a retest of the all time high on a break over yesterday’s highs. SPX 5min chart:
