Wednesday’s session was intriguing and something of a moral victory. Overall, market bias has shifted to the downside.

Against this backdrop, the market could have sold off without question, but it fought off several dips.

Holding At Key Points

The stock market is supposed to be tested and occasionally fail; that’s part of long-term investing.

The strategy revolves around behavior during pivotal tests, such as actions around key metrics-in this case, the 50-day moving average.

As long as the S&P 500 threads around this key metric, it’s a positive sign.

I also like what I see with the rate of change (ROC), which is increasing. The moving average convergence/divergence (MACD) also foreshadows a potential move higher. Nothing from the relative strength index (RSI) or money flow index (MF) yet.

Broader Rally

The rotation trade would carry the next leg of the rally last year, but serious market weakness saw investors either retreat to “Mag Seven” or stay off the sidelines.  Wednesday saw a better balance.

The Jobs Report is as important today as any jobs release last year, as Powell shifted to confidence about jobs after the Federal Open Market Committee (FOMC) pivoted back to focusing on inflation.

I’m partly over the guessing game because the revisions have made this entire exercise a joke, yet the initial release moves markets and will influence the Fed. On that note, key Fed members mentioned a pause but reiterated confidence in reaching their target this year.

I think the labor situation is more dire than the “experts” believe, and the inflation rate should ease, although with the wealthiest folks receiving so much cash from high rates, it will take longer than it should.

Today’s Session

The jobs report came in better than expected (surprise), and the knee-jerk reaction has been higher bond yields and lower equities.

Wage gains are slowing, and full-time jobs have declined by 350,000, but these facts won’t make headlines and probably will not even be reported on.

The composition of jobs is also not great.

The two lowest paying segments (retail and leisure) and government join health care as the top gainers.

However, markets are moving, so we have to make certain adjustments based on the assumption that the Fed will now only cut once this year.

A firmer economy will help the market in the long run, but right now, it's all about another Wall Street hissy fit over monetary accommodation.

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