Stocks Slightly Higher into Final Hour on Positive Economic Data

BOTTOM LINE: The Portfolio is about even into the final hour as losses in my Computer longs and Retail longs are being offset by gains in my Medical longs and Biotech longs. I have not traded today, thus leaving the Portfolio 100% net long. The overall tone of the market is slightly positive today as the advance/decline line is mildly higher, most sectors are rising and volume is below average. The market's initial reaction to tomorrow's jobs report will likely be negative. I still think non-farm payrolls will come in below estimates of 100,000. As well, the unemployment rate could tick slightly higher. This should further boost the chances of a Fed rate cut. Given the recent strong surge higher off the lows, however, stocks may initially weaken on worries that the economy will slow too much going forward. Moreover, a number that meets or beats expectations will likely lead to more talk that the Fed won't cut rates at the upcoming meeting, which will also probably pressure stocks initially. While the initial reaction will likely be a negative one, I wouldn't be surprised to see stocks rally later in the afternoon given how many bulls are underinvested and how many bears added to their shorts near the lows in anticipation of an imminent recession. The 10-year yield is moving to session highs over the last hour, in a delayed reaction to this morning's positive data. I expect US stocks to trade mixed into the close from current levels on rising apprehension ahead of tomorrow’s jobs report.