Treasuries, the US dollar, and the Dow will respond more sharply to a surprising NFP read, as the unemployment rate will likely take a backseat to the headline news. And the most severe reactions in the market will likely be if NFPs fall negative, as this will nearly assure traders that the Federal Reserve will indeed cut rates next week.

Toni Hansen is anticipating the buying to continue for about two more days but expects the overall momentum to be much less than earlier last week and possibly with greater overlap from one day to the next as well.

The fall in the value of subprime-linked securities has boosted a group of funds which spotted the problems in advance. The decision to use derivatives to short, or bet against, low-quality U.S. home loans taken by a select group of hedge funds last year appears to have become the most profitable single trade of all time.

The global credit crunch that has rocked the markets since August has led European and UK interbank lending rates (Libor) to jump to multi-year highs while equity markets remain especially jittery and prone to declines. This has left both the BOE and ECB uneasy, as the instability of the markets adds to mounting downside risks to growth.

Toni Hansen is expecting the congestion from Tuesday to break lower into Wednesday.

Isn’t it wonderful how government can make things better by decree? By edict! By passing a law! Spend too much money? Running a little short? Don’t worry about it; we’ll print up some more. Who says government can’t be a positive force?

If this week’s non-manufacturing sector data signals that the services sector may be faltering, fixed income, forex, and equity markets may continue to price in a reduction in interest rates on December 11.

The indices have been rounding off at resistance over the last couple of days, and the higher high on Friday will make it more difficult for the market to easily break that resistance zone. This is in line with Toni Hansen's expectations for a choppier market as the month progresses.

A second devastating wave of writedowns from major banks has rocked confidence. To add to the gloom there are mounting fears that the problems could engulf other types of American debt – credit cards, car finance and unsecured loans.