If you are confused by the action today, you shouldn't be. Biggest question is, why aren't stocks up more because the non-farm payroll data was better than expected?

The data was indeed good news (ignore all the noise about whether or not the stats are accurate; this is an eternal gripe among traders).

But the information on an improving economy puts pressure on various parts of the market, all of which is normal.

Here's how it works:

1) Better economic data helps the dollar.

2) But the stronger dollar puts pressure on commodities and some stocks.

3) Treasuries: traders are now seeking higher yields as they begin to price in earlier rate hikes than expected.

Peter Boockvar and others have noted that the fed funds futures is now pricing in a 48 percent chance of a quarter point rate hike by the September meeting; up from a 2% chance just yesterday.

4) The flattening yield curve may hurt banks

The battle lines are simple: does consumer have sufficient buying power to lift economy in next 6 months?

Bears:

No--markets will drop in Sept-Oct.

Bulls:

Yes--not roaring recovery, but sufficient

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• The Dow 30 in Real Time
• The CNBC Stock Blog

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