Market Analysis for Jun 2nd, 2004

Today is an interesting day insofar as the relationship between the indexes and oil goes. That's because yesterday we had oil up $2 ,, and after the oil market closed with an hour remaining in yesterday's session the indices took off and acted as if they totally ignored the upmove in oil.

Today, oil is down $1.90 a barrel right now, and the indices are basically circling unchanged. The E-mini S&P is up 1 point, and the E-mini June Nasdaq is down 5.50. All of which suggests to me in my work that the upmove specifically from May 25 in the E-mini June S&P at 1090 and more generally from the May 17 low at 1078 and change -- that the move from those two pivot lows is pretty tired out.

So basically the move from 1075 to 1125 and change has probably either peaked or is peaking within a matter of hours. The problem is that with each passing hour we get closer to the unemployment numbers on Friday. So if we don't have some sort of sell-off later this afternoon, then tomorrow would be the final session to get any kind of pullback ahead of employment, and people more than likely will be positioned net long ahead of unemployment, because non-farm payrolls are expected to be relatively robust.

The latest whisper number, so to speak, for the employment levels suggest that non-farm payrolls will be increased by about 220,000. That compares with the prior month's increase of 288,000.

Having said all that, while the technical condition of the market right now is fairly heavy and suggests to me that, all else being equal -- just purely from a technical perspective and forgetting oil, which is a big if -- the indices should work their way lower over the next 24 hours ahead of Friday's unemployment number.

Specifically, in terms of the E-mini June S&P, the key level is 1118