Jobs Report Beats Estimates. Here's How We're Trading It
Here are the last four Fridays end-of-day moves (starting with the most recent): A 2.4% gain, 2.4% gain, 2.3% loss and a 2.75% loss.
In fact, in the last twelve Fridays, there’s only been one session that moved less than 1% (that was a 0.75% decline on Sept. 16th). The rest of them have been filled with 1% to 3.3% moves in either direction.
Generally speaking we like to fade the jobs gap. So keep that in mind here, especially if we open higher after a stronger report. If that’s the case, I think they will — at the very least — take the ES red.
Now that said, things are getting tricky, as the Dollar is getting whacked right now! The DXY and UUP. Yet yields are climbing too (bad for stocks), so there are A LOT of confluences today.
In that respect, follow the levels on the charts below.
Technical Edge —
NYSE Breadth: 48% Upside Volume
Advance/Decline: 39% Advance
VIX: ~$25
S&P 500 — ES
The 3700 to 3715 area continues to hold for now. The upside rally is not all that convincing to me.
Post-open, I am looking for some sort of potential fade. As of this writing, the ES is up about 33 handles after the jobs report. I could be completely wrong, but at some point, I am expecting a majority of that gain to be wiped out.
On the upside, 3785 to 3790 is a key area. That marks yesterday’s high (Globex high) and the declining 10-day moving average. If they really ram it, then 3800 could be in play.
If we see 3815 I am a seller.
On the downside, 3700 to 3715 remains vital for the bulls. If it breaks, that opens the door down to 3665 — the 61.8% retracement — and then 3640.
As you can see on the H4 chart, we are still struggling with the 10-ema here.
SPY
The SPY actually is a little harder, as not only did that satisfy the 50% retrace pullback we were looking for, but it gave us a wonderful doji candle in the process.
Now trading near yesterday’s high in the pre-market, we are looking at a potential doji-up day — which I tend to like.
The only problem? The jobs report.
The $374.50 level is going to be critical. That’s roughly yesterday’s high and Wednesday’s low. If the SPY can get above and stay above this level, the $380 area and the 10-day ema are in play.
If it reverses lower from this level, then look at $371.50 as potential destination.
A break of $369 is problematic for the bulls and puts $364 to $365 area in play.
QQQ
I don’t care what anyone else says, the QQQs look downright sick, as mega-cap tech continues to suffer.
From here, the QQQ needs to reclaim ~$267. If it can’t, the low looks vulnerable near $254.
Just a note: Look at the Relative Strength List below. There is so much strength outside of tech but too many investors are still glued to FAANG, ARKK, growth and tech. Energy, healthcare, solar and others continue to trade quite well!
Go-To Watchlist
*Feel free to build your own trades off these relative strength leaders*
Numbered are the ones I’m watching most closely.
Bold are the trades with recent updates.
Italics show means the trade is closed.
Open Positions
GIS — Down to ⅓ to ½ after $82 trim. Next trim is $85 to $86, but seems less likely given the climate. Stop at $78.50
UUP — Down to ¼ or ⅓ position with $29.65 stop or B/E on remainder, your choice. — congrats!
Relative strength leaders →
Top Picks (these have been Robust lately):
LNG
MCK — great reset at 10-ema
CAH — great reset at 10-ema
CI
CCRN
GIS — Weekly-up
LPLA
REGN
ENPH — it’s back on the list.
VRTX
UNH
MRK, AMGN
XLE — XOM, CVX, COP, BP, EOG, PXD
TJX
NOC
Economic Calendar
