The jobs report ended the week with a rally and we start this week hoping for a follow through. The challenge will be no economic data until Wednesday and investors will be on their own to decide. News has been one of the driving factors for the markets this year. It will be interesting to see how it trades on its own. I wanted to take some time to outline some points I find of interest heading into the trading week:

The currency factor. The dollar seems content for now to trade around the 80 mark on the index. 81.30 is resistance currently after a break through the 80.70 level. The euro bounced back, at least above support at 135, after breaking below that level temporarily. The short term resolution to Greece’s debt issues helped calm the selling. There is still Spain and others on the debt endangered list. The British pound opened a parachute from the free fall at 149. The yen remains around 110 and there has been talk of the yuan rising against the dollar. In all things have stabilized in the currency markets for now, but it is definitely on my watch list of concern.

The energy sector is of interest as it attempts to break from the current consolidation. Friday the oil and gas sector did make a move above the 50 day moving average showing some signs of hope. The volume was average, nothing exciting. It is important to see a follow through move early in the week. The top of the current trading range in 525 on the index and would result in about a 6% move to the upside.

Crude has moved back towards the top of its trading range. $83.50 is resistance and I would expect that to be challenged this week. A break higher isn’t good for the consumer, but it would be a major move for the commodity. If it fails I like the short side of oil as a trade.

Gold made a nice move to close at $1133 for the week. GLD broke above $110 resistance and could make a serious run at $120 short term. Silver made a strong move higher as well and looks stronger in some respect. The precious metals ETF, DBP broke above $38 and could move back near the $42 mark.

Yields on the 10 year Treasury bond broke higher on the positive jobs report after testing the recent lows at 3.55%. Look for a bounce to 3.85% if the positive momentum continues for stocks. I see some short term downside for bonds, but nothing dramatic at this point.

Technically the NASDAQ managed to break to a new high on Friday (barely). The S&P 600 Small Cap index broke to a new high last week providing solid leadership along with the S&P 400 Midcap index. The move higher is encouraging short term. The challenge comes from the S&P 500 index making a similar move. I think the financial sector will be the key. If they follow through on the move higher good news for the broader index. If they retrace to the bottom of the current range bad news for the broader index. Energy has been laggard for the index as well. It will be interesting to watch.

Overall the markets are poised to move higher. How much confidence do investors have to follow through to the upside is the question of the week. Volume has not been a highlight of the move off the February lows. My advice is to remain patient, take what the market gives and maintain your stops at levels you are comfortable with relative to the current market risk. Then sit back and enjoy the show.

Have a great week of trading.