Stocks are up big today on a blowout ADP employment report. Economists were looking for private sector job gains of 70,000 in June. The actual number came in at 157,000—more than double expectations. The strong ADP report comes on the back of better than expected manufacturing data last week. Two better than expected economic data points, and investors have thrown caution to the wind. In only 8 trading days, stocks have gained nearly 7%.

From a technical analysis perspective, the S&P 500 looks strong. The index bounced powerfully off of its 200-day moving average and instead of running into resistance near 1,340, as would have been likely if a head-and-shoulders top was forming, stocks blew right through the 1,340 level. The next resistance level to watch is the April high—1,363.

Fundamentally the stock market rally is on shaky ground. Last week’s manufacturing data were much weaker than they appeared to be on the surface and those investors buying on hopes that the ADP report signals strength in the labor market are risking a serious case of whiplash. The ADP employment report is a poor predictor of both the magnitude and direction of monthly employment growth reported by the Department of Labor. The Labor Department’s employment report comes out tomorrow morning. Economists are looking for private-sector payroll growth of 132,000 and total gains of 105,000. Neither figure signals robust economic growth. Caution remains the prudent approach.