It will be another busy week for the market after the disappointing jobs report on Friday. The numbers on Friday weren't all too bad if one were to look deeper. The government had more than 100 thousand jobs lost during September. Meanwhile, the August private payrolls were revised up by around 100 thousand.

So, ultimately, the miss wasn’t as bad as it would seem. Given that, there wasn’t enough in this report to have the Fed pivot away from its tapering plans at the November FOMC meeting. I went through all of this in this free video I recorded on Friday after the jobs report.

Banks

This week will be equally as busy with key CPI and PPI data on Wednesday and Thursday, respectively. Additionally, the big banks will kick off earnings season. Expectations for the 'big three' have been rising heading into the week, with JPMorgan’s earnings estimates rising the most, followed by Citigroup and Bank of America.

It may help to explain a little bit as to why these stocks have been advancing some in recent weeks. These rising expectations may make it harder for these companies to put up the results needed to push them even higher, the typical 'buy the rumor, sell the news' setup.

S&P 500 (SPY)

The results from these three companies could help shape and set the market’s mood as we push through the week, including any commentary the banks have regarding the economy’s health -- which has slowed in recent weeks. This economic slowdown appears to be finally catching up with the S&P 500, which managed to finish the week higher by around 80 bps, however it was anything but smooth or easy.

The market fell sharply to start the week, nearly 1.8%, dropping below that 4,300 level I had noted in last weekend’s commentary, bottoming around 4,280. However, we ended up snapping back and rising the rest of the week to recover those losses. We didn’t quite make it to 4,225 last week, but then again, I wasn’t anticipating such a significant and sharp decline to start the week, either.

There is still a pronounced downtrend in the S&P 500 in place, along with a gap at 4,365. This week, given that downtrend, I think we will see the index move lower and fill that gap. Additionally, I happen to believe we will move lower again, perhaps back towards 4,300, as we ultimately work our way down to 4,225 over the next week or two.

Dollar (DXY)

I believe many of the equity market’s problems are coming not from higher rates but a stronger dollar. Since July, it seems as if every time the dollar rises, the S&P 500 struggles. The chart below uses the inverse of the dollar index, and the correlation seems to be too strong to ignore with the S&P 500 futures.

If you don’t believe me, watch the action of the DXY during the week. Watch how the S&P 500 responds as the dollar rises and falls. Another way you can watch this trade is by using EUR/USD. Every time the euro strengthens against the dollar, the S&P 500 should rise, and vice versa.

It makes sense when you think the process through. A strong dollar means that the US is exporting inflation. Any country that buys commodities in US dollars, conducts business in US dollars, or finances its debts in US dollars will have higher costs, lowering its economic growth rate and slowing global growth worldwide. In turn, slower growth is a negative for global markets and the US market.

The chart below is of the South Korean Kospi versus the inverted dollar index.

The following chart is an inverted dollar index versus the iShares MSCI emerging market ETF (EEM). I think the relationship is clear.

An interesting thing happened in 2018, with the dollar strengthening all year and oil prices just continually pushing higher. Finally, oil got to right around 80, and the dollar index hit somewhere around 95.50 to 96, and then oil fell off a cliff around October of that year. Pay attention, oil has been trading around $80, and the dollar index has been trading around 94.30.

Exxon (XOM)

Perhaps Exxon is a good sign that investors aren’t sure if oil can hold these prices. Despite the recent highs in oil, Exxon has not been able to make a new high. It only needs to get above $65 to break out, and I’m not sure it will.

Volume levels have been falling in recent trading sessions, suggesting a lack of buying conviction. Meanwhile, the stock is almost over-bought already. I would watch for a drop back to $55 in the coming weeks.

Micron (MU)

Micron shares continue to hold up around $70, although it seems to be getting closer to breaking down. SK Hynix appears to suggest that Micron may break the $70 level and keep heading lower, ultimately settling around $58. My view remains very bearish on this stock.

Amazon (AMZN)

Amazon has struggled, and one reason is that analysts have been lowering their estimates for third-quarter results and full year numbers.

If earnings estimates are going to be coming down heading into results, it will be hard for this stock to lift anytime soon. The trend has been firmly negative for some time, and when the shares tried to get over $3,300 this week, they failed. I think this stock is heading to $3,200 over the very short-term, and may likely head to $3,000 over the next several weeks.

Intel (INTC)

The outlook for Intel is deteriorating, too, with earnings estimates dropping rather materially in recent weeks. It probably helps to explain why the options traders started to place some bearish bets on the stock, as I noted earlier this week.

All it will take is a break of the trendline at $52 to get this stock moving sharply lower, perhaps on a path to $47.

Lemonade (LMND)

Lemonade’s stock has been struggling, and it amazes me just how richly valued this stock still is. A break of support at $58 would set up a drop to $46.