I remember years ago when I was just a trading assistant, my job for the pm was to cover for him when he was on the road - ie make the trading decisions. When he went on vacation, which was normally August each year, he left me with guidelines on what to buy and sell if a set of circumstances developed. One August, the pm left me with instructions to unload our whole SP order if the model we had said "-1." So when the market went into freefall one sunny day in early August and the model hit -1 but bounced, I was left with a conundrum. Do.I follow his instruction and sell or do I make a judgment call. I chose the latter and the market bounced higher into the end of the month. From there on, I got absolute price levels to go with the model number.
The point of this story to perhaps explain today's very one sided day. We dived in the morning following the jobs report only to bounce back. Then the sellers emerged and simply pummeled the SPs lower. As the day went by nothing happened as the SPs basically did not budge for 4 hours. When the move higher came, a surge in volume followed (I was buying as I tweeted) and up up away! Soon the inexperienced were covering shorts or adding back exposure because today was a day that was not predictable - at least in terms of seeing good volume from 930 to 11am...nothing till 215pm and a rally then into the close on mediocre volume.
Ladies and gents - welcome to August...a month where nothing ever makes sense so put away your rule books and go to the beach! I myself will probably be in scalping mode for much of the month though I would not be surprised to see the 1131 level in the S&P 500 taken out. A break through there and the next stop is somewhere in the 1170s. As for the jobs report this am, job momentum, at least the way I measure it, continues to improve. Thus I look for a good bounceback with the August report. My view for monday - I am looking long.
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