Despite the ‘big surprise’ from the NFP report and all the noise regarding FX/ interest rate possibilities that caused big intraday swings,  we only know one thing still… (A close between SPX1115 to 1120 is needed badly to even think of a breakout eventually).   Our discussions late in the week concentrated on the 2 failed follow throughs to the rally after hitting new intraday highs with no conviction (volume) buying coming in for a breakout.    So, for the 3rd day  the market lost momentum as it nears 1120.   If you bought and /or chased the morning action,  you’re not with us in believing the importance of seeing a 1115-1120 close before being enticed to buy.   We need to see sustained strength and 30minutes as Friday morning is just not enough!.   Still,  we saw the tape show resiliency again as support was found at 20ma (twice) and allowed the market to finish green.  

Yes, there is disappointment that a big surprise NFP wasn’t able to the job for a breakout, but it doesn’t necessarily signal we have set our 2009 in highs as we have Dec seasonality as a possibility still after all this FX/ interest rate speculation settles down.    Also, we had plenty of potential headwinds to break 20ma last week, this shouldn’t be forgotten, including the strong dollar rally that couldn’t close the market in the RED.

Simply, we’re in a trading range 1120- 20ma, meaning no more adding to holds and no selling of them until one of these levels is breached.