The highest probability is the SPX 1010.91 low to get taken out after this upside short term oversold bounce

The S&P 500 Index ended with a gain of 14.4 points, closed at 1104.51, to settle atop the 1,100 level for the first time since Aug. Stocks tacked on more gains Friday after the Labor Department said the economy lost 54,000 jobs in August, fewer than expected. But a report on the Institute for Supply Management's (ISM) services index slipped to 51.5 in August from 54.3 in July. Economists had forecast a decline to 53, Still, stocks closed near session highs Friday.

Another day, another better-than-expected economic report. It's all about the payrolls number. Trading volume was light with many market participants on vacation. The liquidity was so thin, the SPX can easily be manipulated, especially if the jobs report is fixed by the Administration to the "better than expected". While the jobs data suggests the economy could avoid a "double-dip" recession, investors may remain nervous about the outlook for short-term growth. The housing and banking sector are still dragging down this market. In addition, concerns about growth in China and debt problems in Europe continue to weigh on the market. There's still a lot to worry about.

I still think that the highest probability is for the SPX to take out the 1010.91 low sometime in the Sept/Oct period, and the 950-940 zone is the primary target. The SPX is still very negative on a technical basis, as the current stock market is Below-the-Line, which is when the 200 day moving average>50 day moving average>20  daymoving average>8 day moving average.

The SPX broke below 1056 last week which is the .618 Rertacement level from the low of 1010.91 to the last high at 1129.24 and if that happened, the rally from July to August will be nullified because when a rally retract more than 61.8%, the momentum will be subdued. The highest probability is for the SPX 1010.91 [7/1] low to get taken out after this upside short term oversold bounce, and that is what we are in right now.

I still shorting this market with SPXU and will hold on to next week and see how this market perform after this week's stunning surge.