• Three days after a large surprise in the jobs report of 50,000 jobs, up or down, the S&P 500 was higher only 5 out of 18 times.  Its average return was minus 0.5%.  Markets don’t like surprises because they create uncertainty.

• Ten days after a negative surprise of 50K jobs or more, the S&P was higher 55% of the time.  Ten days after a positive surprise of 50K or more, it was lower 58% of the time.

• Ninety days after a large negative surprise, the S&P showed an average return of +5.1%.  Ninety days after a large positive surprise, its average return was 1.7%.

• The correlation between surprises in the jobs number and 90-day returns in the S&P 500 has been -.32.  This means that the more positive the surprise, the more negative the performance in the S&P and vice-versa.  Given the sample size, this is significant.

And, perhaps most important of all… 

• If the market did cartwheels for the jobs report and closed higher by 0.5% or more, there was only a 33% chance that is was still higher 30 days later.  If it fell out of bed and declined by 0.5% or more, there was a 93% chance of it being higher after 30 days.

Well the market did not do cartwheels nor did it fall out of bed so that last bullet does not come into play here.  But you can see by the above stats that the odds are stacked against the market flying away.  Not that it can't happen, it would just be going against past trends if it did.  58% of the time the market is lower 10 days after a surprise positive report.  Of course that means 42% of the time it is higher.  Ninety days later the S&P 500 is up an average of 1.7% after a positive surprise vs. 5.1% after a negative surprise.  Again the strong report appears to hurt the market rather than help.

Just like sentiment, it doesn't seem to make sense and goes against what one might think.  But a strong economic report like this will not deter The Fed from continuing to raise interest rates.  If the jobs report was in line with estimates, or even slightly lower, The Fed would be more likely to put on the breaks. 

Friday's uneventful market action pulled back to the support line again, and held.  So far so good.  The market moving straight would make me a little nervous.  This move up, take a break, move up again, action is what we want to see if this rally is going to sustain itself.

 
                          Chart provided courtesy of www.decisionpoint.com

I don't want to over-analyze things too much at this point.  I believe it is a good time to be in stocks, at least for the next several weeks.

That's all for today.  Currently 65% C, 20% S, 15% I fund.  Until next time...