July jobs came in at 528,000, far above the 258,000 that was expected. Wage growth was up 0.5% month-over-month, 5.2% year over year, also above expectations. Bulls wanted slower job growth to keep pressure on the Fed to slow rate hikes. Bulls also wanted lower wage growth to show inflation was peaking. Neither is happening. Good news: strong jobs market argues against recession! Bad news: Strong jobs number and a hot wage number refutes the “peak inflation” narrative. The Fed remains hawkish. Most of this week has been spent watching whether the S & P 500 can break into a new trading range, something between 4150-4200 maybe. Not surprisingly, it’s proving difficult to get into that new range. With fundamentals so murky, traders are full of talk about technical levels. Sam Stovall from CFRA yesterday noted that 4231.66 level, which is a 50% retracement of the roughly 1,100 point loss the S & P saw between the January 3rd high and its June 16th low. “The jury remains deadlocked, however, as to whether this is the beginning of the end of the bear market rally or the end of the beginning of a new bull market advance,” Stovall wrote. “Should the S & P 500 close above 4231.66, history says, but does not guarantee, that the equity market has likely entered into a new bull market, since none of the earlier 13 bear markets since 1946 enjoyed a retracement of 50% of its decline only to endure a subsequent selloff that exceeded the prior low.”
