 Hey everyone, this is Mike Kramer of Mock Capital Management. Today is Thursday August 31st. It's around 7 30 p.m. New York time So tomorrow is the big day September 1st. We're going to get two big reports that are going to really Close out the week into the three-day weekend here in the US for the Labor Day holiday So far to this point we've gotten a lot of economic data It's given us a lot of information About where inflation is where growth may be but ultimately speaking this job report is going to carry some importance Especially since this is going to be the last job report ahead of the September Fed meeting With really only one major data point left after this for the Fed to decide whether or not it wants to proceed with a Rate hike in September. So this BLS job report is going to have a lot of weight Estimates are for a hundred and seventy thousand jobs to be created in the month of August down from 187,000 as always we're going to want to watch revisions because revisions have certainly been meaningful over the past Year, we're also going to want to watch the unemployment rate 3.5% expected to be unchanged average hourly earnings This obviously is a very big sticking point zero point three percent month over a month Last month zero point four percent average hourly earnings year over year four point three percent last month four point four percent There's been some people paying more attention to this average work weekly hours 34.3 percent and then at ten o'clock. We're going to get the ISM manufacturing report We're looking for forty seven up from forty six point four Prices paid going from going to forty four from forty two point six and so this is a bit of an interesting scenario where you get a job report and an ISM report on the same day and The ISM manufacturing report carries a lot of weight just because it's one of the first reports for the month And it gives us a really good and it kind of sets the tone in terms of you know What the rest of the data for the month of August may look like? so I kind of thought about you know recent times and when we've had this same phenomenon happen and it actually happened back on January 6 and In this case it was the ISM services index that was reported but still an ISM data point and In the case of the January numbers you got a strong non-farm payroll You got a better than expected unemployment rate. You had Alverage hourly earnings year over year come in below expectations so overall strong hiring strong unemployment rate and what we got was a market that Gapped higher and then gave all those gains back into 945 now whether or not The sell-off would have continued or not. We will never know right, but then the ISM services data comes out at 10 a.m And the estimates were for 55 and it comes in at forty nine point six suggesting that the Services sector is now in contraction and so of course if you know the way the market thinks bad news is good news This means the Fed isn't going to raise rates anymore. We're going into a recession services have cracked and You know that means the Fed is done right? Of course that wasn't ultimately correct But the market responded in that manner and so what this was is that you've got this giant rally Going on the rest of the day With basically, you know finishing the day up here You know so you had nearly a move from 38, you know call it 3809 at the low to a high of 3902 so almost a hundred S&P 500 handles in one day a monster intraday move, right and So I'm bringing this up because I think it's worth knowing that The data that comes at 830 while it's very important and is likely to influence the market greatly It has the possibility of being trumped by the ISM data point that comes at 10 o'clock And so I would just be aware that you have these two major data points coming Because they're going to have an effect on the market And more importantly, they're also going to have effect on rates and they're going to have an effect on the dollar So when we look at the S&P 500 The the the things that really stand out to me first of all Is this straight pattern here? It It is a pattern we've seen a lot over the years Uh, especially in the past two years Um, and here's an example of it here where we just got this sharp rally We stalled out for a couple days and then gave it all back Um, there's other examples of it like here Back in may you got a big sharp rally and gave it all back So this pattern doesn't look all that different from those and so The way i'm thinking about this, uh from two standpoints is number one We still have a bump and run pattern in here It's not really i'm not really convinced at this point that this has been broken We haven't moved in further enough away from the uh from the bottom trend line to suggest this pattern is not in play Number two, we came down to and closed right on that trend line today Number three, if we gap below this trend line tomorrow, I think there's a good chance this whole thing gets erased um and The jolt's trade is unwind essentially The scenario that leads to higher prices would result in basically The index quickly taking out 45 35 and then being able to just continue to move up from there And I think that ultimately leads to a move up to 45 50 Which is where the call wall is as of today And if you could pass 45 50 you're talking about a move up to 45 80 and filling this gap um And that's sort of where we are on the s&p if we move over to the nasdaq the nasdaq has made some progress A little bit more progress that is than the than the s&p because We were able to get back above this trend this support level And we were able to get back up to this 15 5 60 region And this is your resistance level at the moment um clearly again, we close Closer to the lows today than the highs uh in terms of the intraday movements Uh, we want to really see the nasdaq gap above 15 5 60 tomorrow if that happens. I think it obviously opens the door to 15 720 um If for some reason we were to not be able to surpass these levels I think just like the s&p The nasdaq is susceptible to this whole rally being erased. I I don't know that there's really like an in-between scenario because it it feels like Once these levels are broken The the momentum can just can really pile up when we look at the dow. It's a little bit more convoluted I think because There's just so many strange things going on in this index at this point number one We had what looks like an aberration golfing pattern again in the dow um We've seen these now a couple of times in a couple of different indexes over the last couple of weeks um The dow is obviously very close to its 50 day moving average very close to its 10 day exponential moving average Today you can see it comes up test resistance at 34 990 35 000 gets above it fails closes lower Closes almost at the lows of the day um and just not uh an overall just not a very bullish sort of uh day for the dow and Again, I think the dow has a much harder path here because Again for the dow it's all about getting over 35 000 Uh, if you go back below 34 600 for a second time It seems more likely than not that you're going to go back down to 34 170 And then from there obviously the the door is open to much lower levels So this is your second attempt at this area And for the dow it needs to really clear this 35 100 region or so To really see a meaningful advance back up to 35 300 um Anything sort of move down tomorrow and a break below 34 600 really sets up What could be an ugly day? I think for the the dow and honestly if you're going to see the dow starting to move down sharply It's going to be a probably a pretty negative day for the markets overall so you you have these two scenarios that I think are are very uh very far ranging and you could you could see a very big up move tomorrow in in the s&p and in the nasdaq Or you could see a very large sell-off and I think at this point it's I don't know that there's really an in between You know because you're talking about a move back up to in a gap full of 45 80 of almost one and a half percent Likewise, if you were to break down and return to 44 30 you're talking about a drop of about 1.6 percent And I think that's just where the market is And I mean if we just check one other thing If you look at the dollar index The dollar index is also sort of telling you the same thing here Because you know again, we came back down. We tested 103 got back above 103 and a half And again, if you get stronger data that's supportive of Again the us outperforming the rest of the world the dollar is just potentially going to run and It can it can make a meaningful move back lower undercut the euro And really start to really start advancing against the euro So I think in general the whole market is sort of set up in the same way. Here's your 10-year treasury rate Again, just sitting on support at 410 a break of 410 obviously sets up a move down to 4 Likewise, if you hold 410 you're talking about the potential to move up to 420 So I think tomorrow while it's supposed to be the day before labor day I think there's a chance that you could see some pretty big moves in the marketplace Following these two big important data points. So I think you know again 8 30 is the BLS job report But do not forget about the ism data point at 10 o'clock because that can be Just as important as the job report. So anyway, have a great rest of your day and I'll I'll see you next week. Bye