Editor's Note:

Readers know I have been cautious on the markets. Stocks are very overbought with the rally off the February lows. Fund managers were feeling the pressure to post gains for the quarter and there was a distinct lack of selling as we neared the quarter end. A market correction here would be both normal and healthy. However, there is no rule that says the market has to correct. As a matter of fact the S&P 500 actually looks ready to breakout higher again after nearly two weeks of consolidating sideways. Imagine the short covering we would see if that were to happen. The NASDAQ and the Russell 2000 don't look quite as strong as the S&P 500 but they also saw bigger gains from their February lows. The transports and the railroads look similar to the S&P 500 (bullish) while the banks act like they want to move higher even though the failed rally on March 25th still looks like a top for the financials.

I would prefer to open bullish positions after the market has corrected but that may not happen. Everything will hinge on the jobs report this Friday. Economists are expecting the U.S. to see a gain of 180,000-190,000 new jobs. If the results are too low or too high we're going to see a big move in stocks on Monday. It's quite possible that investors end up selling the news anyway and that makes adding new plays this weekend, without seeing the market's reaction to the jobs report a guessing game. We will add new candidates in the weekend newsletter but readers may want to wait and see how the market moves on Monday before putting new capital to work.