The SPX Premarket appears to be challenging its 60-minut3e Cycle Bottom resistance at 1971.86, very near the 38.2% retracement level. However, the Employment Situation Summary came out above expectations with a reported 292,000 new hires in December. On the surface it looked good, but average wages posted its first drop since 2014, according to ZeroHedge. So the jobs report is a mixed bag.

Bloomberg reports, “One legacy of last August’s selloff in equities has been a refusal among bearish traders to reduce short sales from the highest levels since 2011, even as stocks rallied. As the year begins, their stubbornness is paying off.

As has been true for four months, the proportion of U.S. shares borrowed and sold, the first step in a short sale betting on a decline, sits just above 3 percent of U.S. stock outstanding, according to data compiled by Markit Ltd. and Bloomberg. Those look like profitable trades as proxies of least-loved stocks plunge to levels not seen since the end of the financial crisis.”

As the bond market opens earlier than equities, we can get a peek at what may be happening internally in stocks. It appears that TNX has completed a 35.5% correction this morning and may be resuming its decline.

Should stocks follow, we may see the 1880.00 target for the SPX later today.

Regards,

Tony

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