And just like that, sentiment has swung... and it turns out that means more than we thought

Once again, Friday's employment report is likely to be strong, but that strength is fading. While economic data appears to be softening, the market has made a technical reversal with sentiment at an extreme.

The numbers are convincing at such sentiment extremes, but it is the exceptions that you have to watch.

The macroeconomic data continues to be mixed, but money flows and sentiment point to the potential start of the third wave.

Mixed coincident indicators suggest trading the range until it is broken.

The recent buy signal proved to be timely, but as the strength fades, be wary of the leading indicators.

While still relatively strong, the employment data continues to soften and now that the impact from the hurricanes is going to appear in the data, it will likely only muddy the numbers.

Now that the overall stock market has bounced, we can reassess the near-term outlook, but the macroeconomic data scheduled for the week will probably be found lacking.

Industrial Production is expected to remain strong but the real story is liquidity and the resulting volatility, which are combining to give us a potentially familiar setup around earnings.

Volatility has become modestly overbought, which has been a trading opportunity in the past and likely will be for the short-term now; but evidence suggests the trade has shifted from being sellers of volatility spikes to buyers of low volatility.