S&P 500: Is Friday’s Jobs Data Bullish for the Market

In the first week of 2023 we saw more of the same of the last week of 2022. The S&P 500 continued with its consolidation. There is still discussion of the Federal Reserve continuing to raise interest rates in 2023. Friday’s trading action was bullish after the jobs data was released.

U.S. stocks staged their first notable rally of 2023 to close the week higher Friday after December employment data showed wage growth decelerated last month. Investors perceived the release as a sign Federal Reserve officials may ease their rate-hiking campaign.

Stock market news live updates: Stocks end first week of 2023 higher after jobs report spurs big rally – Yahoo Finance
S&P 500 Daily Chart

Friday’s bar is quite bullish and is now trading at the resistance level of 3900. If this is going to be bullish for the markets then we need to see follow through. The volume on Fridays bar was average, we need to see first price break the resistance level on increased volume.

If we see a down bar on Monday’s trading then the consoliddation action will continue. Lets take a closer look at the pricing action for the week.

Point 1: Testing the Market

Monday’s pricing action shows that traders were testing the market. The bears pushed price all the way down to the support level, this is an area of buying. The bulls came in and drove the price higher and it closed at the high of the range. The volume was lower than the previous 2 days and it was below average.

Point 2: Attempt to push markets higher

On Tuesday we saw a continued rally and the price just fell short of the resistance level at 3900. Price then turned around and traded around the lows of the day. The bar closed at the bottom third of the range and the volume was slightly above average. The bar closed lower than the previous day which shows neither the bulls or bears are winning this fight.

Point 3: Continued testing of the market.

On Wednesday the pricign action shows that there is still testing arounf the support level at 3800. The bears are not in control when price reaches this level and the bulls come in to drives prices higher, The volume for the day was higher than the previous day.

Point 4: Bears in control.

On Thursday we saw poor jobs news and the bears drove the price down towards the support level at 3800. The volume for the day was lower than the previous 2 days. For price to continue lower, the volume would need to be higher than the previous two days.

Point 5: Bulls in control with the hope of pausing interest rates

Friday’s pricing action shows the bulls were in control and with pricing testing the consolidation resistance level, we need to see continued follow through for this market to continue to move higher and test the upper trend channel.