Now that the Greek PSI nonsense is behind us (rolls eyes), the event-of-events is the jobs report Friday morning. Even if I knew precisely what the data was going to be, I wouldn't know what to do with it. A blowout huge jobs report could, on the one hand, cause the market to soar because of the recovering economy and could, just as easily, crash the market since it would make the prospect for QE3 even more remote. Or we could see both reactions within the first fifteen minutes of the report's release.
I intended to share an event split of bullish and bearish index charts, but I had a lot easier time finding bearish ones (imagine that!) Let's start off with some bullish arguments.
First up in the NASDAQ composite, which has done a yeoman's job staying above its breakout level of about 2890. Even during Tuesday's plunge, the index didn't even come close to threatening to pushing below that level. The breakout implies a rise to over 3,100.
A more compelling case is seen with the S&P 100. I've circled the prior instance in which the index made a bullish breakout, paused a bit, and then zoomed upward with just about a perfect 45-degree angle. As hard as it might be to believe, we might be in for more of the same. The reasons don't matter. Reasons stopped mattering, oh, about three years ago.
A fuzzier picture is offered by the perpetually-saved Euro. The huge bearish pattern is still firmly in place, but my goodness, this thing is just refusing to break down in earnest. I confess I was hoping for some kind of shock from the system, but it didn't happen; they managed to pull off the Greek salvation without a hitch so far.
Let's turn our attention to more familiar bearish territory. First we have the $HUI gold bugs index, which is beautifully positioned for a glorious tumble for many months to come (provided it stays beneath that ascending trendline).
The Dow 30 managed to get back above its horizontal line, but it's mushed right up against that broken trendline you see below. A swoon beneath Tuesday's lows would make the most sense, chart-wise.
A very different perspective, offered by the NASDAQ 100, is shown below with monthly bars spread out over nearly a decade. Are we closed to the top of this massive channel or the bottom? Gosh, I'd say the top.
The month-long range of the Russell between about 810 and 830 was magnificently fractured, and the past couple of days have been spent clawing back to that breakdown level. A big rally on Friday would really muck up this chart. Weakness could easily send it below Tuesday's lowest levels.
The broker/dealer index $XBD is a thing of beauty. The push to the underside of that broken red trendline was a terrific fulfillment of this index's price destiny.
Lastly, the June 2012 S&P e-mini contract offers up one of the cleanest wedge patterns you can imagine. We slipped beneath it Monday, plunged away from it Tuesday, and spent Wednesday and Thursday trying like mad to get back to that lower trendline.
Friday is absolutely key. If we have a big rally, a lot of charts are going to be an unmitigated mess. If we fall away with even a slightly weak day, the markets still line up beautifully across the board. I don't think we'll know for sure moments after the report is released, but half an hour after it goes through its spasms, we should have a lot more clarity. I'll see you then.
