Stocks opened slightly higher and managed to add to their initial gains throughout the 1st two hours of the day. Highs were made by 11.00 am ET and from there we went into a prolonged and narrow sideways channel.
We closed off the highs but still managed to erase a good portion of yesterdays losses. The Dow closed up 57 points or + 0.68 % and the S&P closed + 3.98 points or up 0.43 %.
It was once again another calm day in the markets. One could argue it is the calm before the storm (in this case the unemployment report scheduled for tomorrow morning).
My best guess for tomorrow is that we will see an initial reaction to the number, possibly spanning throughout the first 2 hours of the session. After the the initial run players will switch into holiday mode and I would expect sideways action from there with not much activity.
The real test as to whether the current advance has some legs will come next week. If the we have another up day tomorrow but fail to build on those gains next week the market might be in trouble and head lower next week. Too early to tell of course but right now this is my favorite scenario.
I have been neutral stocks for some time now but next weeks looks to me like it might offer some real insight where we will be heading throughout the summer.
However, the important issue is to get the unemployment number out of the way. Don't expect to much but at least a 1 % movement either way should be in the cards.
See you tomorrow,
Steve Benger
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