Today we’ll see if the number was good enough to excite buyers at a major support level.

PRE-OPEN MARKET COMMENTS FRIDAY – This week the selling pressure has continued. Yesterday the market broke below the 200-day MA and it’s lost 7.5% in the last few weeks. The path lower has been bumpy, but that should be expected in the early stages of a trend reversal. Buyers are still conditioned to buy dips and that causes the bounces. Shorts are also timid because they don’t want to get trapped in a snap back rally. As the trend reversal gains traction, buying subsides and the selling pressure accelerates.

The jobs report this morning generated an initial “pop”, but those gains have been given back. The reaction was muted. It might not influence the market one way or the other. Hourly wages increased .3% and that was inline.

Bull markets die hard and after a big drop in the last few weeks, we are likely to see a bounce off of support. I don’t know when that might come, but I do know the pattern I will be looking for. I want to see a wimpy drop early in the day with mixed overlapping candles. As the market reaches for a new low for the day, bearish speculators will pile in. I will be looking for a long bullish engulfing candle off of the low for the day. That is not enough. I need to see another long green candle stacked right after it. This insures that the first candle was not a “solo”. This pattern has to happen in the first 60-90 minutes of trading. I want to see that early low and I want to see the rubber band snap off of the low. That is a sign that buyers are engaged. It is very important that this happens early in the day because that will give it the rest of the day to rebound. We want to see many more green candles than red on heavy volume. We want to see very little retracement and strong movement higher. The first part of the bounce will result from short covering. The second leg of the bounce will be dip buyers.

This is the best pattern today because it will set up sustained directional movement that we can get behind.

I am bearish and you should all know that by now. However, I am not going to be aggressive with shorts at this level. If I see steady selling pressure below the 200-day MA on heavy volume, then I will only short on a failed bounce that is shallow and relatively brief.

Absolutely no question that after this number and after the heavy selling pressure we have seen the last 3 weeks, our best odds are to play a bounce from a day trading perspective. This is especially trued at the 200-day MA. Overseas markets were weak and that makes a probe for support more likely to start the day. The gains from the initial reaction to the jobs report were also given back easily.

From a swing trading standpoint, only pro traders should attempt short term bullish swing trades if we get the bounce and the rally above the 200-day MA. If the pattern I have described plays out, we should see follow through Monday.

If the market leaks lower all day, day trade it very passively and don’t stick your head into this noose. Be ready to pull the plug on shorts and pivot. I am just going to wait for signs of support. If I don’t see them I am not likely to trade. I want to focus on a bounce because that is where my odds are best and where I can make the most #$%^ money.

Support is at the 200-day MA and resistance is the high from Thursday.