The sell-off that followed the positive January employment report on Friday should not have been a surprise. It was the typical market reaction to strong economic news during the early stages (relatively speaking) of a tightening cycle. Positive economic news could be inflationary and push the Federal Reserve into a more aggressive tightening phase.
The S&P 500 settled at 2607.75 and has lost 7.6% since Thursday’s close. Today’s session stalled at a high of 2763, and failed to hold the key level at 2757, a trend line and Friday’s close. Price action began cascading below the overnight low of 2733 and all bets were off once our rare major four-star support at 2690-2700 was taken out.