Blowout Jobs Report and FAANG Earnings
The S&P is under pressure from a 1-2 punch.
Technical Edge —
NYSE Breadth: 66% Upside Volume
Advance/Decline: 70% Advance
VIX: ~$18.28
AAPL had its first profit miss in years, while GOOGL and AMZN were both lower on earnings. So were Ford, SBUX and QCOM.
So we can’t blame all of Friday’s weakness on the jobs report. Which by the way, that number came in roasting (see “economic reports” below).
A day after the Fed just finished talking about “deflationary” forces starting to come to fruition, the labor report shows a dip in unemployment, a robust jobs figure and higher-than-expected wages.
On Wednesday, the market gave Chairman Powell the bird when he talked about “higher for longer” rates. Essentially, markets are playing a game of chicken with the Fed, expecting the Fed to be the one to blink.
Obviously inflation is steering the ship, not the labor market, but this report has to have the Fed thinking they’ll have to keep up the pressure on rates. That reality is exactly what we’re seeing in the initial reaction out of equities (although a robust two-day rally makes it easier to hit “sell”).
My main thought: There have been many positive developments over the last 4-6 weeks in the equities markets, but we don’t want to see the SPX, SPY and ES fail to breakout over 4100, $410 and 4175-4200.
There’s support below, but it wouldn’t be a great look.
S&P 500 — ES
The Globex low is 4138.50 and yesterday’s low is 4136.75. In other words, this level matters.
If we go daily-down and can’t reclaim ~4137, then last week’s high is in play near 4110. If that’s the case, I can’t help but notice the third rejection from 4180-4200 in as many quarters.
On the upside, bulls need to take out 4178 if they want to see this go higher. Then 4200 is in play.
SPY
We got a bit extended in the SPY yesterday, so like the ES we will have to watch yesterday’s $412.88 low. We are near that mark now in pre-market trading.
This level could act as a low-risk pivot for traders on both sides of the ball today, however, if we trade below this level and fail to regain it, the $410 breakout level is in play, then $408.16.
It took a lot of work to get $410+ and it would do bulls well to hold it into the weekend. If we do see $410, I expect it to be good for an intraday bounce, at the very least.
On the upside, I expect $413.70 to $414 to be potential resistance, at least initially.
QQQ
As for the QQQ, a pullback here is healthy. Keep a close eye on the $303 zone. There we have the gap-fill from Thursday and the 50% retracement of the two-day bonanza it has enjoyed.
An overshoot puts $300 back on the table.
Otherwise, as deflating as it would feel, a “reset” back down to the $293 to $295 and/or 10-day moving average would be rather healthy and give us some great long setups in tech.
Open Positions
Numbered are the trades that are open.
Bold are the trades with recent updates.
Italics show means the trade is closed.
(Any positions that get down to ¼ or less (AKA runners) are removed from the list below and left up to you to manage. My only suggestion would be B/E or better stops.)
From this latest round, that includes TLT, DE and FSLR.
NKE — Down to ⅓ or less as NKE cleared $130 yesterday. B/E stop or $126 is fine. Either exit the rest or hold for a potential runner as Nike bases nicely.
NFLX — 3 trims on Wednesday, now make sure you’ve got a B/E stop (or better) and fish for $369 to $370+ on the final tranche.
Go-To Watchlist
*Feel free to build your own trades off these relative strength leaders*
Relative strength leaders →
AQUA
AEHR
MELI
GE
WYNN, LVS
NVDA, NFLX, TSLA, SHOP
SBUX
AXP
BA & Airlines — AAL, DAL, UAL
TJX, ULTA, NKE
CAT
HCCI
XLE — XOM, CVX, COP, BP, EOG, PXD — (Weekly Charts)
Economic Calendar
