The jobs report has been released and to this point the market has not been concerned about recent job losses.

PRE-OPEN MARKET COMMENTS FRIDAY – Yesterday the market rallied ahead of the jobs report. It left the impression that regardless of the outcome, stocks were going to move higher. If the number was light, that would increase the odds of a rate cut in 10 days. If the number was good, the Fed still might cut and conditions are not as bad as feared.

I believe that one bad number is not going to spook investors, but we are already at third month of weakness. May, June and July were disappointing when accounting for the downward revisions. I doubt we can trust the headline number and that is what drives the market. This is the most important economic release each month and the weekly initial jobless claims numbers are not consistent with a declining labor force.

JOLTs, Challenger, Gray & Christmas and ADP all reported weakness so regardless of what the BLS reports we know that labor conditions are soft.

I as writing my comments before the release and the number is out. Only 22K jobs were created in August. That is the lowest level this year and the downward trend is clear. Surely the market dropped on the news – right? No. The market is making a new all-time high.

I suspected as much when I saw the market rally yesterday ahead of a big number. That is not typical. Institutions normally wait for the release and the price action the day before is dull. Thursday’s move higher told me that no matter what institutions were going to be positioned on the long side. They weren’t going to wait for the outcome because good or bad, the market was going to react positively.

Perhaps they feel that this drop in employment is temporary and that lower interest rates will spark economic growth. Central banks around the globe have been easing for the last year and those economies have not rebounded. It doesn’t really matter what the institutions are thinking, it only matters that they are buying.

The market dips have been brief and shallow barely lasting a day. That is a sign of strength. It is typical for the market to rally after the first Fed rate cut. We haven’t seen any signs of a September market pullback and with each week that passes, that becomes less likely. By the middle of October, seasonal strength kicks in.

I don’t chase gaps up to a new all-time high and that is especially true when the news is bearish. Last month the S&P 500 lost 130 points on a 77K print. Today it is making a new all-time high on a 22K print. I am going to watch the open and if we get a run away “Gap and Go” I won’t chase it. If this scenario plays out I will find an opportunity to buy a pullback mid day. The risk of having the rug pulled out is too great. Big gap reversals are common off of gaps up to a new all-time high. If we are going to see this scenario there will be stacked long red candles right out of the gate. A more likely scenario is a compression after the gap up. That would be a sign that profit taking is being offset by buying and that eventually the market will work its way higher. The most likely scenario is a gradual pullback into the gap that finds support. This will give us time to find the best longs.

When I talk about scenarios, I am taking the initial reaction into account after the number was posted. Right now the market is convincingly making a new all-time high.

Support is $649.50 and resistance is $700.