No jobs, no buyers of stock index futures
Buyers went on strike after a massive two-week rally that likely forced most of bears to run for cover...just before reversing. This morning's dismal jobs numbers, or maybe lack of numbers, triggered a wave of liquidation ahead of an uncertain and long weekend.
Specifically, the U.S. economy added NO jobs last month to post the worst results in 11 months and the first time since 1945 that we've seen a flat-line. Although zero is better than a negative reading it was well below expectations and is certainly a thorn in the side of the bulls.
Yesterday's failure at 1230 was a bit of a clue as to how today might go, but when we mentioned the S&P could pull back as low as 1170 we weren't counting on in happening today. Although, looking back we should have guessed it...after all, holiday weekend, political chaos and a lack of confidence combined together will always trump fundamentals.
It is clear that the economy has hit a rough patch, and we highly doubt the recovery will be swift...but we also feel like many of the days issues have been given a bit too much credence. Nonetheless, emotional trade can prolong agony for long periods of time and history suggests we could get a full retest of the lows before things begin looking rosy on Wall Street again.
Our charts point toward 1170 being the "make or break" level and this leaves us relatively neutral and waiting for clearer waters next week. The way we see it, the bulls have a slight edge on Monday due to near-term technical support and possible optimism over the President's job plan (although we feel any optimism regarding a too little, too late plan will be unfounded). Also, if Tuesday comes around and it turns out to have been a tame three days off, investors might have had enough time to cool their heads and get back into the saddle.
If you are trading the September S&P, look for near-term support near 1166, 1144 and then 1109. Resistance on the way up will be 1189 and 1206.
* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does.
**Seasonality is already factored into current prices, any references to such does not indicate future market action.
Please note: An e-mini S&P and e-mini NASDAQ chart are used because they better for charting purposes, but trade recommendations can be applied to either the full-sized S&P or the mini. Unless otherwise noted, profit and loss will be based on the mini version.
Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading
Position Trade -
Flat
In other markets...
8-26- Clients were advised to sell October corn 820 calls for about 9 cents.
9-1 - Clients were instructed to take a quick profit, fills were reported near 3'6 to lock in a profit of about $263.50 before commission and assuming an entry of 9 cents.
9-2 - Clients were advised to sell the November 30-year bond 151 calls for 27 ticks or better.
(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more. Email us for more information)
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Source: http://www.fxstreet.com/fundamental/market-view/the-stock-index-report/2011-09-03.html
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