Friday’s less than impressive employment report pushed stock markets further into the red, causing the S&P 500 to end its first week of the year down nearly 4%. The employment report is perhaps the biggest monthly economic indicator there is and usually sets the tone for the entire month.

Market breadth is currently indicating an extremely oversold market. The percentages of S&P 500 stocks above their 10, 20 and 50-day moving averages are 4%, 10% and 19%, respectively. As such, we can expect short-lived relief rallies while a meaningful bottom is found. The negative backdrop will likely persist until there is positive news, such as bigger than expected rate cuts or upward revisions of the latest employment data.