This is the daily notebook of Mike Santoli, CNBC’s senior market commentator, with ideas for trends, stocks, and market statistics. For now, the market has allowed the two-day rally in the new quarter to hold as people await a monthly jobs report. Initial assessment of a retest of June lows and snapback rally suggests this is a respectable performance with a good chance to prove significant, but more needs to be proven again. Honestly capturing these moments always sounds far-fetched and wise, but this is a game of probability shifting and the beginning of another bear market rally that looks indistinguishable from peak lows and the start of a new uptrend. The S&P 500 is still looking up to the 3,800 ish level, bulls expect further downside, so a lot of work remains to be done. But the slight drop to the June low was “close enough” as the re-tests came in and some boxes were checked: sentiment worse but the number of new lows not so bad, the Smaller stocks held slightly better than large and the breadth was that the rally was surprisingly strong. The index needs to show more sustained momentum, but there is already a good indication of real demand at around 3,600, a 25% drop from the peak, with many if not all of the Reserve Federal/income eroded and very defensive equity positioning. For multi-year equity visibility, buying the 25% down market is an OK strategy, even if a rough ride to new lows awaits. Speaking of position, the National Association of Active Investment Managers’ equity exposure index has risen from a multi-year low, but it remains below neutral. It’s supportive, but not a screaming contrarian buy signal anymore. Energy stocks continue to play a solid lead, outperforming crude oil. Part of this is natural gas. Part of that is decent cash flow at this oil price. Some are simply a scarcity of companies with rising earnings estimates. But maybe, just maybe, it’s becoming a busy mall? The Fed’s speech remains fairly consistent: No victory claims on inflation will come anytime soon, and interest rates need to rise and stay above 4%. They absolutely must and will speak this way until the moment they are ready to pause – which will only happen after months of deflation and/or a bad market/economic rift. Not much news has been repeated and at least we’re getting closer in time and distance to the Fed’s likely target zone, which is a modest plus. The Street wants a good number of jobs tomorrow with a soaring participation rate that could drive unemployment up a relatively easy way to help the Fed. Bond market volatility is too high to allow stocks to comfortably move into recovery mode, so Fed expectations remain soaring. In many ways, the MOVE is more important than the VIX. Market breadth is still soft. Credit is OK after increasing a lot. VIX nearly 30 before payroll.