The market put in an impressive midday effort to turn it around. While several major equities indices climbed into the plus column, market breadth wasn't impressive.

Market Breadth	NYSE	NASDAQ
Advancers	943	1,541
Decliners	2,279	3,022
New Highs	14	34
New Lows	252	425
Up Volume	1.28 billion	1.74 billion
Down Volume	2.80 billion	3.01 billion

 Eight of eleven sectors finished higher as investors favored defensive names.

Heat Map

The Heat Map was impressive, with a number of mega-cap names trading higher.

All focus will be on the Fed. But the Atlanta Fed 3Q Gross Domestic Product (GDP) estimates zoomed higher after a couple of data points came in better than expected. There was a time when this was the kind of backdrop you wanted so that companies could make money. Now, we must root for the bad news.

DXY

The U.S. Dollar (USDXY) is giving the market fits – but it is extremely overbought.

Key Charts

Hammer Time

Hammer formations, which often signal reversals, were everywhere at the close.

For the S&P 500, the key is to get back above the 50-day moving average – that will be a make-or-break test.

NASDAQ

The NASDAQ Composite actually bounced off a key test of support before turning higher to finish at the high of the session, although still in the red.

Transportation

As a proxy for the overall economy, the iShares U.S. Transportation ETF (IYT) closed above its 50-day moving average, but it is still in a decidedly powerful down channel.

Ironically, the Fed probably wants to see more pressure on the sector as Powell & Co attempt to tip the economy over.

All eyes will be on this morning’s jobs report. I have no idea what it will be, but a disaster is brewing and will reveal itself soon.

Portfolio Approach

We suspended our Current Buys yesterday on our Hotline Model Portfolio.  We are adding them back this morning.

Today’s Session

Jobs Report

While the overall number is higher than expected - seems to me the market is looking at details that might assuage the Fed if they become long term trends.

Headlines

The White House has signaled that the July number is probably the peak. The question now is what will be the new normal.  There are lots of job openings, but recession will erase many of them in a flash.

Participation higher

There were 344,000 Americans that came back to the labor force and that’s great news.  We need folks looking for jobs and not chilling at home eating Fruit Loops as the government subsidizes their existence. 

Wages flattened out and, are still significantly below the rate of inflation, and that will make the Fed happy as well.

I like the reaction from the market.  It wants to go higher, but with the three-day weekend, who knows.

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