Jobs Jobs Jobs

So Thursday was a crazy chop fest of a day in the market. Just boring action period. You had to be quick with your scalps today as the moves just didn't trend. But overall that was what I expected as I said yesterday. We got the morning sell and somewhat of a bounce into the close.

For Friday I am expecting a possible rally believe it or not. Jobs data due out premarket will be the story of the day. In my opinion anything less than 500k jobs lost in Dec and less than 7% rate is bullish and you very well may see a nice bounce in the markets into the weekend. Of course if we get a nasty surprise we could just as easily go to 880 as a first stop.

On the charts we are setup nicely to rally because today we came down to the low 890s and that is just beyond the 50% retracement of the rally from last week. If we can hold that retrace level around 890 this market can really start to tear. And a better than expected jobs number just may be that catalyst. We'll see.

On the upside I could see us moving to 963 as the next swing target if we start the leg higher. For Friday the pivot point is at 902 so my idea would be to see how we open (we are almost surely going to gap one way or the other after "the number" comes out). If we gap higher I would like to be a buyer of a partial gap fill or retest of the pivot.

I think we could easily see 916 if we go up. There will be some resistance in the 916-920 area. That's a 50% retrace of the move down from Tues. If we get over the 923 level then we should see some real buying. So anything can happen Friday, just be ready to play either side once the trend establishes itself.

Slide

Wednesday we saw just about exactly what I highlighted in the previous nights analysis. After we gapped down in the morning we had no attempt at a gap fill. There were only few retracements throughout the morning that provided from short entries. But if you got in and held till the close you had a great day.

The market slid on Wed. because it was technically set up to DO SO. Of course the headlines will blame the bad news from Alcoa and Intel. Sure that added fuel but the point is that these charts don't lie and showed signs of rolling over on Tuesday. The market is having a nice retracement of the big rally the last week or so.

Oil fell off a cliff just as expected after the inventory data. Gold is rolling over and looks to be having trouble getting over that 50 day ma so I am not interested in gold until it gets back over 900. Commodities led the rally last week and seem to be leading the pullback midweek.

The question is whether this will be more than a pullback. I am looking for the 890 level tomorrow to show some support. I think we may bounce in the that area. However, if we do break, and close, below the 876-880 crucial support then I will become more bearish. As for now we are in a normal pullback mode. The 50% retrace should give us some bounce so we shall see.

Thursday could be one of those sell in the morning days followed by reversal in afternoon type situations. Obama is speaking at 11am et on the economy so it will be interesting to see if he inspires the markets.

Indecision Day

Tuesday the markets chopped around a bit and closed higher slightly overall. However, we failed to break the morning high of 942 on the futures and seemed to really run into resistance above the 930 area on the SPX. Looks to me like the market is a little tired and in need of a pullback after a large rally the past week or so.

For Wednesday the pivot point on the ES is 932. I think if we gap down then a retest of the pivot in the low 930s could be a god chance to go short. If we break Tuesday's lows then I think we can easily see 918, which is a good support area to expect a bounce because it is the previous area of resistance we broke out of last Friday.

If we do break that 918 area then I will be watching for a move down to the low 900s minimum with a possibility of seeing the mid 890s. Remember that we are up about 90 SPX points in one week roughly so giving back 45 of them would be nothing more than a healthy 50% retracement.
It will be interesting to see how oil reacts Wed to the inventory report. Oil had a ugly reversal day on Tuesday closing at 48.5 after getting up to 50.5. I would be a seller of energy here and perhaps expect a move back down into the low 40s.

Overall look for a pullback going into midweek but if we somehow breakout over the 940 area I would like to see a close on the 30min chart to confirm. Trade safe.

Bull Trap?

Well as we kick 09, the markets gave back a little gain today from Friday. And that is just fine. I am still bullish intermediate term but think short term we could see a pullback into the low 900s after the selloff late in the day today.

Market failed to break 934 and proceeded to come right back down to the pivot poitn where it then bounced into the close. Overall the action was very choppy for much of the day and volume was still lacking at about half of normal.

For Tuesday the pivot point on the ES futures is 926. The futures are grinding up just above that overnight as I type. I would look for weakness near the open and if the ES falls below the pivot then try to short any retest of the pivot. I would take longs on retraces of the futures if the ES got over 934 Tuesday.

Fed Minutes are due out at 2:00 pm et so be aware and watch for possible reversals of trend at end of day (as if that isnt common knowledge lately).

Oil is up 25% in like 3 days which is insane and the dollar rallied nicely today. I would think oil is ready for at least a pullback near here so dont be rushing into any of the energy or ag names after these crazy runs. The dollar/euro pair got stopped cold around 1.39 Monday and looks to be a sell the rip mode.

Lastly I mentioned gold earlier and it got hammered today but closed well off the lows. I would not be long gold until it cleared the crucial 900 resistance level and that may take a bit more time to transpire. If it breaks 840 to the downside then it could see the low 800s once more.

The Bond Bubble

The last several months the bond market has been ripping higher and yields are collapsing (bond prices and yields move inversely). Yes and with all these fear struck investors looking for a "safe investment" they are piling into US treasuries. Thus forming a bubble. *Gasp* And yes like every bubble ever created, this one in the bond market will pop and money will flow into something else.

As you can see from the chart, bond futures are literally going straight up lately. Last week saw the first consecutive day pullback of this size since late October. I dont think the bonds have topped just yet. You are likely to see at least one more leg higher that may or may not make NEW highs of the 142 ish area.

It does look like this bubble will pop in the near future and when that happens you will see a outflow of money here and where will it go?

I think it goes into the gold market. At the same time it looks like gold is poised for a breakout over the 900 level. Gold has been consolidating for the better part of a year now after hitting all time highs around 1000. I will follow up with a look at the gold chart.

Sean Hyman from MyWealth has an equally interesting take on this bond bubble/gold trade.

This Week's Trade 1/5

This week I am looking to see any signs of continuation of the low volume rally last week. Pivot point for Monday is at 918.75 on the ES futures. If we gap up above that in the morning then I would look to buy a retest and then look for pullbacks into the main trend of the day. It does feel like we wanna rally higher this week. We shall see what happens but I am gonna start the week with a slightly bullish bias. That pivot point is also the same level of which the month long consolidation broke out of on Friday so a retest of that now support is a good buy signal.

Of course we have ran up quickly and a pullback would not be surprising. However if we do get one I think it is still a good buy in the intermediate term. The move from last weeks low of 853 to the high of 932.75 has a 50% level of 893. If we do get down to that level I think its a buy. Below the 884 area and we will have to look at more short side trades.

Econ data out this week includes:

Monday- Construction Spending, Auto and Truck Sales

Tuesday- Factory Orders, ISM Services

Thursday- Jobless Claims, Consumer Credit

Friday- Nonfarm Payrolls, Unemployment, Wholesale Inventories

Of course everyone will be waiting for the crucial jobs report Friday but bad news is already expected. Let's see how the price action reacts early this week to more volume back in the market and a fresh new year on the books. I think the path of least resistance is higher in the intermediate but don't be alarmed to see a pullback Monday and if it happens, look for buy signals on those retraces.

Party Like It's 2007..

So if you woke up today and were a viewer of CNBC you might have thought we turned back the clock to a few years back or even started the next great bull market.

Lol, umm no.

While this move does look good on the chart and we have finally broken out of the month long range below 920, I would like to see the big volume come in next week and provide a continuation move.

Bottom line is now that we have closed over 920 on the SPX we have a nice floor of support below us. Get long on some swing trades here and stop yourself out on a close below 910ish. Like I have been saying since early December, I think with this close over 920 we could see a nice short squeeze of a rally up to the 1000 level. Perhaps a bit closer to the 1020 area into the Obama inauguration.

I have a bullish bias above this 910 level. An interesting thing we saw today was that new highs outpaced new lows for the first time in awhile. Not by much but nonetheless we saw more new highs, which is bullish.

Looking forward to seeing regular volume come back to the post-holiday market next week.