Bulls got what they need, that is, a job report that is not too hot but is not too cold either. With the upward revision for the previous month, investors don't seem to have a need to worry about potential recession, at least for now. The US dollar rallied sharply against Euro and Yen when the news first came out but has since retreated. It shows that the market is still uncertain about the Fed's next step. Remember that Wall Street doesn't like uncertainty. If we continue to receive better than expected reports in the next few weeks, the market may use them as an excuse for selling off. Treasury bond sold off sharply as the possibility of a near term recession is pretty much non-existing. S&P hit another record high today following Dow's breakthrough several sessions ago. Tech appeared to take the leadership role again in today's strong market. As I mentioned previously, tech stocks have a good chance to lead the market if there is a fourth quarter rally and I continue to believe so. Since the current market expectation for Q3 earning growth is very low(below 2%), there exists good chance for many companies to beat the consensus. However, what's more important is to pay attention to guidance for the fourth quarter and 2008. If they are reasonably good, we may indeed enjoy a nice fourth quarter rally.

As expected, the market is moving little as investors are keenly waiting for tomorrow's job report. It is the previous month's report that pretty much determined Fed's stance towards rate cuts. Ironically, either a better-than-expected report or a worse-than-expected report can cause selloff in the market. As the market currently has priced in another rate cut at the end of this month, a good report will lessen the necessity of doing so. On the other hand, if the report were much worse than expected, investors may start truly thinking about the possibility of a recession sometime down the road. So expect some volatility in the market if the number deviates too much from the consensus(read as:+/-50000;currently the consensus is 100K). Oil price closed higher today and now is back above the 80 mark. Since it's a very quiet day, it's worth spending a few minutes reviewing some big pictures undergoing right now: 1). As I mentioned several times before, one important investment theme this year is that everything related to emerging Asia growth(mainly China and India) is doing particularly well while anything related to the US housing market is doing terrible(if you don't believe, just rank all sectors within S&P and you will see what I'm talking about). I believe this theme will continue for a while until some unexpected force turns the whole tide; 2). As the US dollar has dropped over 33% on average against major currencies for the past 5 years, some smart money will(or is already) start to grasp US assets. Remember, one important thing to beat the rest of the market is to think ahead of the crowds(but not too ahead). As most people are still talking about weakening dollar, I believe it's time(or close) to bet on the dollar; 3). This year is the third year in the US presidential term, which historically is doing very well. So a fourth quarter rally is very likely. And compared to many other asset groups, US equity is actually not that expensive.

It is not surprising to see the market pulled back somewhat after Dow going straight up for more than 1500 points. Nasdaq was hit particularly hard as a Morgan Stanley analyst issued sell ratings for several chip companies. Micron's so-so earnings didn't help the most influential sector within tech either. Several emerging markets, including Hongkong and Brazil, are selling off noticeably. It's always difficult to tell whether that's due to pure profit taking or simply we have seen the peak. Most emerging markets are not driven by fundamentals long time ago. Instead, money inflows and investor confidence are the keys to sustain them. Both Oil price and Gold price moved little in today's market. US dollar got strengthened against several major currencies. As I mentioned previously, I think US dollar is currently trading at its bottom area so don't expect it to move much lower. If there is one thing that keeps reminding investors of what happened 20 years ago it is the VIX, which remains at an elevated level. As Friday will bring this week's most important economic news, the market could be in a relatively quiet mode tomorrow, which is not a bad thing for the bulls.

The market holds remarkably well after yesterday's big run. It seems this bull still has some upside potential. That being said, one needs to keep in mind that some cautiousness is probably not a bad thing as the market has already gone up more than 1500 points in the past few weeks. Gold price dropped more than 10 dollars amid strengthening dollar and some profit taking. China market is closed for a national holiday while HK's HangSeng hits another record high and now is sitting above 28000. "Irrational Exuberance" seems to be back, except this time is on the other side of the Pacific Ocean.

It's hardly imagine that just 1 month ago people are worrying the US market could end the year in negative territory. Well this is still possible. For the time being, investors have enough reasons to celebrate, that is, the Dow creates another new record high and is expected to close above 14000. The first day of the month and quarter is definitely on the bull's side, especially taking into consideration that this morning's news is not all good. However, one has to remember that October is traditionally a very volatile month and this year marks the 20th anniversary of the "Black Monday"(for your record, Black Monday has the second biggest intra-day drop for the Dow; the biggest happened back in 1914, right before the first world war started). All three major averages record pretty much the same amount of gains, indicating some buy program is at work. Since the market is not terribly overvalued, investors may have good reasons to cheer for a while.