S&P 1360 is the key level after the jobs report

by Michael Tarsala, CMT

The market reaction to this Friday’s disappointing jobs report could be a bigger deal than usual, based on Jeffrey Saut’s latest analysis.

The 1360 level on the S&P 500 is the line of demarcation between the bulls and the bears right now, according to Saut, the market strategist at Raymond James. And he thinks that a “decisive and sustained” breakout above that important level is the signal for putting more cash to work in the markets.

Source: Stockcharts.com

We’ve already moved above 1360 this week, amid the strongest 3-day run of 2012. Stocks moved higher this week on better factory orders data as well as speculation ahead of economic stimulus actions by the ECB, the U.K. and China.

But we my have seen a false breakout to the upside.

As you may know, many market technicians primarily use closing prices to help gauge where stocks are headed next. And that makes intuitive sense. The extreme highs or lows — often where there’s little volume — do not represent the bulk of the trading action.

For that reason, a daily closing price carries a lot more weight than what happened intraday.

Using that same logic, the weekly closing price is even more important than daily closes — especially to strategists and technicians who are trying to gauge where the market will go in the coming weeks and months.

The disappointing jobs number relative to expectations is pointing to a lower market open — so far.

But it’s really where we end up at the end of the week — above of below 1360 — that is worth watching.

It could be very important to the success or failure of the rally over the past four weeks.