Welcome to the weekend, folks. While stocks may have ended the week on a high note - with a gain on Friday - the holiday-shortened week was basically unproductive. I think we can attribute Friday's advance to hopes that weak job numbers would inspire the Fed to remain dovish longer than it was planning on remaining a couple of weeks ago. I don't see the euphoria lasting past the weekend though. If the market really is going to rally this month, it's going to need more. We'll talk about what's ahead for stocks in a second. The first thing we need to cross off our checklist today is a reality check for the employment report. No Matter How You Slice the Unemployment Numbers... Well, as usual, the media gave you just enough perspective on today's unemployment numbers to be dangerous, but not enough to be helpful. So, as usual, we're going to clean up their mess and give you ALL the relevant data... and tell you what it really means. Above all else, there are only 16,000 more people working in the United States now than there were at the end of July. Yes, the Department of Labor reported 142,000 new jobs were created in August, but that number doesn't really factor in all the jobs that were lost or eliminated last month. As of the end of August, there were 146.368 million employees, versus 146.352 workers in the country two months ago. [Not much of this data jives because not all of it is gathered the same way using the same pool.] So how did the unemployment rate drop from 6.2% to 6.1%? Because the number of people who consider themselves in the labor force - whether or not they're actually working - fell by 64,000 people. The total number of people who said they're willing and able to work in August was 155.959 million, down from July's 156.023 million. Why these 64,000 folks decided to take themselves out of the labor pool isn't clear, but you have to figure a bunch of them simply decided to say "forget it" after being unable to find gainful employment. Either way, since the unemployment rate is calculated by dividing the number of officially unemployed people by the number of people who are technically in the labor force, the rate itself dropped. Speaking of the number of officially unemployed individuals, that figure technically fell by 80,000. It was 9.671 million in July, but 9.591 million in August. Take a look at all the data (and its history) in a graphical format. That dip in the number of unemployed workers is roughly in-line with the increase of 64,000 workers last month, which sounds "good" even if it's shy of the 142,000 new payrolls the DOL reported. Problem: A bunch of those people who took themselves out of the labor force actually DO want a job. The Federal Reserve says 6.304 million individuals are not being counted in the labor force figure but actually would like to work. That's up 45,000 from July's total of 6.259 million people who are no longer bothering to look for work. Or, here's an interesting data nugget that will put a wet blanket on this morning's mediocre data. Whether you're buying the 146,000 "new payrolls" figure or the 64,000 more employed workers or the 80,000 fewer unemployed people as a measure of successful job growth, the U.S. population growth rate is about 200,000 per month. Not that newborns should be entering the workforce, but we can presume a similar number of people are - or at least should be - entering the workforce every month. The point is, we're not making a ton of progress on the jobs front even when the numbers are touted as great. August's data, no matter how you spin it, wasn't a victory by any stretch of the imagination. Don't get the wrong impression. We're not telling you the global economy is on the verge of a meltdown. We're just making sure you're armed with the facts before incorporating any jobs data into your decision-making process. If you really think strong employment is necessary to have any hope of real economic growth, then you've got some tough choices to make. (For what it's worth, we don't think job growth has to be great for the bull market to last. We just think it has to be steady.) Setting Targets Just to give credit where it's due, a big chunk of today's market commentary was inspired by this afternoon's edition of the Elite Opportunity newsletter. We can't give you the most critical and actionable commentary John Monroe gave to EO subscribers in Friday's edition, but there's still a lot of value in the snippets we'll be able to look at. With that in mind, let's start by painting a bigger picture. I know we've been leaning bearishly of late, even when most of the clues pointed to bearish momentum. I just want to reclarify something about that - we're not looking for the beginning of a new bear market. We're still long-term bulls for fundamental and even technical reasons. We just think it's time for a decent-sized correction. Part of this expectation stems from the market's overbought condition, part of it stems from the market's frothy valuation (the trailing P/E is now around 17.8), and part of it stems from the sheer fact we've just gone too long without a sizable but normal pullback. Any such dip is going to be viewed as a buying opportunity, however. Now, one of the things we haven't done much recently - even though we've been bearish - is talk about downside targets... should the bears ever manage to get the ball rolling. Let's do this today for the S&P 500. No need to mince words - there's a major floor for the S&P 500 at 1970, where the 50-day moving average line is. There's also a confluence of support taking shape around 1937, where the 100-day moving average line is, and where the lower 20-day Bollinger band will be pretty soon. Both of those lines have played a support role in the recent past, so it's not crazy to expect to see it happen again. There's just one issue with even suggesting the S&P 500 could fall back to the lower of those levels at 1937 - even then, that slide would only be a 2.0% tumble. Yeah, it looks (visually) like a big plunge. Numerically though, that's a joke. It's not enough for the market to punch its "reset" button good and hard. So how far should the S&P 500 fall before a true, capitulatory bottom has been made? To answer the question with any meaning, we may want to look at a weekly chart of the S&P 500. It's in this timeframe we can see there's a long-term support line tagging all the major lows going back to late-2012. This floor will be at 1926 next week. Problem: Even a lull to 1926 would only translate into about a 4.2% correction. This is certainly more meaningful, but still not the kind of stumble where the long-sidelined buyers would crawl out of the woodwork again and come pouring in. On the other hand, given the market's history, I believe a trip back to 1926 would be big enough that spoiled investors - and the media - would deem it a great buying point. In fact, I suspect traders and the pundits would use the chart above, with its support line, as a reason to get bullish again. It admittedly means a little less without the context of what came before or after it, but this snippet from today's Elite Opportunity newsletter pretty well sums up what John and I both feel right now: "At this point, we continue to highly question the markets' ability to move all that much higher on a short-term basis without first providing some semblance of a sharp pullback." Though he didn't, I'll stress the word semblance in his sage advice. A dip to the 1926 area would seem like a big dip to investors, which is why I think it could be a major floor for any September pullback. Valuations would still be a minor problem then, but they wouldn't feel like much of a problem. But if 1926 (and rising) isn't the magic number, what is? This is where today's edition of the Elite Opportunity really got me thinking. Without giving away too many details, and without giving away the proprietary where or why, let's just say John Monroe sees the 1700-1800 "zone" as a key support area for the S&P 500... for technical as well as fundamental reasons. It sounds crazy to talk about such numbers, at first. The more you think about it though, the less crazy it sounds. Think about it like this. Even if the S&P 500 were to hit the lower edge of the likely support zone at 1700, that's still only a 15% stumble. Yes, it's a lot, but let's not forget what used to be a normal market dip - before the Fed started to step in and stopped letting anything bad happen - was on the order of 10%; a 15% dip wouldn't be too unbelievable, even if it was shocking to spoiled investors. Here's another reason the 1700-1800 area makes sense as a bigger picture floor - at that price, the S&P 500 would be trading around a trailing P/E of 16.0 and a forward-looking P/E of near 14.0 (assuming the pullback materializes sometime in the next few weeks). Those would be closer to "normal" valuations; the current valuation has already tiptoed into "abnormal" territory. As John said it today... "...it's our opinion the S&P 500 can't be considered undervalued until it can find its way below the 1,800 level." This all suggests the 1800-ish mark is an area we need to watch closely. A slide to 1800 would be about a 10% slide, which is an ideal bull market correction. Whatever the case, none of this is a prediction for a major pullback. It's just a notification of the true situation. If the floor at 1926 fails to hold up, then we can really start to entertain the 1700-1800 target. Until it happens though, let's keep things in perspective. As much as I'd like to, I can't give you any more details John Monroe gave Elite Opportunity subscribers today. I can tell you, however, today's EO offers the exact P/E levels at various values for the S&P 500. And, I can tell you John's technical floor for the index makes a ton of sense too. If you want the specifics - and trust me when I say you want 'em - now would be a great time to use the free two-week trial offer to the Elite Opportunity service. Today's edition would be a great edition to soak in this weekend, because I've got a feeling the rest of September is going to be on the wild side. Here's how, or cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/