NEW YORK (TheStreet) -- The market has continued its pullback into Friday's Nonfarm Payrolls report, and it looks as if volatility is closing in on its tipping point.ADP employment data on Wednesday showed that the economy had added fewer jobs than economists hoped, and furthers the evidence that the labor market is not stable enough to exist on its own yet. Financial markets continue to oscillate heavily, because investors see the continued mixed bag of economic results and fear a life without stimulus. However, it does not seem as though stimulus will be pulled off the table in the near term. The markets may be discounting too heavily at this point, but that is essentially what a correction is. The price action in the charts below reiterates the point that markets were in need of a correction, and this is nothing short of that. Intermediate trends have not broken down just yet, so it is safe to say that dips in the market provide excellent buying opportunities. The chart below is of Guggenheim S&P Equal Weight ETF ( RSP) over SPDR S&P 500 ( SPY). This pair measures market breadth or the amount of participation in equity movements. As the pair moves higher, a bullish indicator, it signals that a majority of the S&P 500 is participating in the trend. The pair below highlights a pullback into the sideways trend. There is no concern yet, possibly just an overshooting of the upper support line. If the pair continues lower after Friday, then there may be a rise of fear that equity investors are moving to the sidelines.
As of this past week, the price action has shown a strong pullback towards the uptrend line. Heightened volatility in global financial markets has been the culprit of such a move. The yen is a safe-haven currency, and although currency weakening is taking place in the region, investors prefer holding yen to the other more unstable currencies.
The Nikkei has fallen to its relative uptrend line, but does not look to have considerably broken support. As long as the pair can resume strength in the near term, investors will continue to view Japanese equities with a favorable sentiment.