How the market will react to the jobs report

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Today's commentary was written by Geoff Bysshe, co-founder of MarketGauge.

Sometimes you just have to wait. Today was all about the fact the all important jobs data comes out tomorrow.

If you step back and look at the charts for the answer to the question of what does the market expect from the jobs data you may want to consider this…

Since the TLT’s bottomed in on 5/26 the stocks have followed their lead (in reverse) each day. The result is the TLT’s have rallied suggesting a nervous market, and the stocks have fallen, also suggesting a nervous market.

Many years ago I would have seen this a sign that the stock market was likely to react negatively to all but the most bullish reports of jobs data.

However, now I know that this is not true.

Often times the markets will sell off into the big report and shake out all the weak bulls. The result then becomes a bullish scenario in all but the most negative of outcomes from the report. In other words, “sell the rumor, buy the news”.

Unfortunately, in this case, the sell-off has not been big enough to bank on reversal to the upside tomorrow regardless of the report. But is has been enough to watch out for a reversal.

Don’t expect the nervous market to fall just because that’s what it’s been doing. Let the Opening Range (30 minutes), and the key levels mentioned below be your guide, and most importantly…

Don’t be surprised by any outcome. The market definitely very nervous.

S&P 500 (SPY) Consolidated for a second day. The big number to clear on the upside is 207 and support is at 204.

Russell 2000 (IWM) Continues to slide, but basically consolidating. Next big number is the 50 DMA at 109.40.

Dow (DIA) Consolidated for a second day like the rest of the indexes.

Nasdaq (QQQ) Second day of consolidation, and still has the look of a little double bottom, but not very convincing. First level to clear on the upside is 105.50. Until then the direction is still down.

XLF (Financials) Consolidated for a second day. Needs to get back over 23.30 to demonstrate any hope of strength. Next big support is 22.75.

KRE (Regional Banks) Inside day, but with yesterday’s big range and today’s general market consolidation this is not a very telling inside day. However, it is sitting on a big area of support from 38.75 to 38.25

SMH (Semiconductors) Consolidated for a second day. Still at 54 which is pivotal and the 200 DMA. There isn’t any good support until 50.25! Needs to clear 53 before considering a long.

IYT (Transportation) Broke down today by following through on yesterday’s close below the 50 and 200 DMA. Important swing low to hold is at 136.60

XRT (Retail) Hit hard today. And through the support at 43. The next big level of support is 42 then 41.50.

IYR (Real Estate) Small range day, but positive and breaking out of a 6 week consolidation. Following TLT’s higher.

GLD (Gold Trust) Flagging into support in the 121 area. Broke prior day’s low slightly then bounced.

SLV (Silver) Third day of closing around 16.50 which is also the 10 DMA and a prior high. Range to watch is 16.75 to 16.40. Next big support should be a 16.

GDX (Gold Miners) Yesterday closed under the 10 DMA for the first time in a month. Today gapped up over the 10 DMA and held nicely. Low of the day was also the floor trader pivot.

USO (US Oil Fund) Gapped over the important level of 11, but sold off back to close at 10.90. Today’s low, 10.80, is a key support level, then 10 should be good support. Needs to get back over 11.05, to consider longs.

XOP (Oil and Gas Exploration) After 5 down days in a row for the first time in a long time, it gapped up nicely and consolidated to form an inside day on 200 DMA and other support. A move over 34.60 could start a new leg up. Watch the 10 DMA for resistance, 35.05.

TAN (Guggenheim Solar Energy) Continued its slide into bearish phase and through trend line from the Feb. lows, but into a support area. Wait for it to stop dropping. 22 is a big support level.

TLT (iShares 20+ Year Treasuries) Big breakout over the 50 DMA after yesterday’s bullish phase change. It is into major resistance, and Friday’s jobs report could have a big impact on this in either direction so watch this carefully.

UUP (Dollar Bull) Another up day following Wednesday’s bullish key reversal on good volume. Now into big resistance from 24.25-.40. There is more resistance over 24.40, but if it can break 24.40 it may have put in a significant low on Wednesday.

RSX (Russia) Subscribers: Gapped higher and consolidated around 17. Needs to get through 17.20 to start heading higher. Look for support at the 50 DMA 16.35.

CORN (Corn) Subscribers: Sitting on support level of 21. Needs to clear 22 to be positive.

BAL (Cotton) Subscribers: Another volatile day with high near big resistance at 42 and low at the 200 DMA and support at 41. Needs to break 43 to look good.

DBA (PwrShs DB Ag Fd) Subscribers: Consolidating. 21.28 point to clear

DBC (DB Commodity Index) Subscribers: Sitting on 200 DMA. Needs to hold 14.

SGG (Sugar) Subscribers: May have been the biggest range day in years, and down. 36 offered some support. 35 is the next big support.

PHO (Water) Subscribers: Slipped under the support of 23.80. Looking lower now. Next big support are is 22.