The Friday jobs report did set the tone, just as we thought.

One thing I have found when trying to time the market is that once you notice a trend, it seems to go against you.  The trend I mentioned Friday for reaction to the jobs report was right on queue... sort of.  

You would think a strong jobs report would help the market and a weak one would hurt.  But as I mentioned Friday, it tends to do the opposite.  After 10 days of a good jobs report, the market is down more often than up, and 10 days after a bad report the market tends to be up.  But what remains to be seen is what happens after 3 days.  Three days after a surprise report (50,000 above or below the estimate) the market tends to be down as it doesn't like surprises.  So we had a big rally after the bad report.  Will the market pullback before rallying again?  Will it just continue to rally?  Or will it peak this week?  I wish I knew and I bet you wish I knew too, but unfortunately I don't. 

Here's what I do know.  The S&P 500 chart looks pretty good right now.  The thing we have to watch for the intermediate term is if we go above the December highs, or if we fall below the January lows.  As of now this drop has been just a healthy pullback.  As long as the S&P 500 stays above the 1160 area.  My plan right now is to go back to 100% stocks if we get a pullback in the next couple of days.  But before you go make that transfer, I also plan to get more into the G fund on a move near 1210 to 1220 if it looks as if the market won't have enough momentum to make a new high. 

The PMO indicator, which I show all the time but never explain, is a momentum indicator.  You can see below (the blue and green waves) that when the indicator goes above the 10-day moving average, the momentum in stocks continues higher (see points # 2, 3, and 4).  But if we are going into a consolidation as we saw early last year (see point #1) we could be near a short term top.


                             Chart provided courtesy of www.decisionpoint.com

Making a market call here is what makes or breaks a prognosticator.  There are a lot of bulls out there, and a lot of bears.  Only half will be right.  I think I will stay neutral and let the market make the call.  I will buy weakness and sell strength.  If we make a new low (below the 1163 area) I will get nervous.  If we make a new high over 1217, we could be on our way to a new leg up.

It is still an uncertain period.  Nothing like last summer when my indicators were telling me an explosive rally was around the corner.  Things need to improve before I get there again.  But I haven't seen any reason to hide under a rock yet either.  I'm being cautious and will likely move around a lot until I get a better feel for things.

This week I will not be in my office so I may be online more during the day.  I will likely take a couple of days off at the end of the week for some R&R.  The slopes in Park City, Utah are calling my name, even though I don't particularly like skiing.  But my wife and I do like art galleries, wine and hot tubs.  
                             
That's all for today.  Currently 50% G, 50% C fund.  See you tomorrow.