The SP500 should be due a breather today. However, the market is temporarily on a p&f buy signal with all trade above 1241.

The ISM report is expected to be hovering around 52. This is only slightly expansionary. As and when this muddle through announcement is made, do not be surprised to see a bit of digestion later this morning. On last month's ISM report, the morning high was set around 935 am CST or 35 minutes after the ISM report. I would be surprised to see a bid last much more than a few minutes after the ISM anti-climactic announcement, given yd's power surge. The reason to drawing your attention to last months ISM report is to note the 2.5 hour & -17 point pullback that followed the ISM report that morning. The globex high today is 1249. Subtract 17 from 1249 and you get a 1232 target. This is the swing low from yd afternoon that supported the market to the 1249 surge.

Initial confirmation that a digestive trade is underway is a print of 1241 on the 50x4 p&f chart, followed by a print of 1139. That should be sufficient to take out the globex low near 1236, targeting 1232 and the bull gap low yd at 1227.

But, don't expect too much digestion, investors want to keep a bid in the market b/c of tomorrow's bullish expectations for NFP report. A larger digestion will have to wait until the NFP report is announced.

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