|
|
All I can say is that a lot of people must have been caught short at support. When you see this kind of spike and follow through, it happens after too many people are standing on one side of the boat and we capsize. Fortunately for the bulls, the bears are the ones getting thrown overboard without a life jacket this time. If you recall, we were in the opposite boat in early August when everyone was hoping for an upside breakout and we rolled over killing both the bulls and sentiment along with it.
Such is the way things go when the market is stuck in one giant trading range. People get too bullish at the tops and too bearish at the bottoms. Cycle, rinse & repeat as often as necessary.
If you’ve not been keeping track, recently the market hasn’t been in a bullish mood on job report days (i.e. the last four reports the market closed down) even though though it hasn’t always been that way. Between November 2009 and April of 2010, for example, the S&P produced a positive gain each and every month. The explanation many people will say is that fears over a double dip and the economy’s inability to grow jobs at this stage is particularly worrisome to the market. But, as always, it usually boils down simply to expectations. I think it is safe enough to say that most people are not expecting anything good from tomorrow’s report. It would only shock if it isn’t as bad as expected or a huge stinker. For what it is worth, the risk of a super stinker is relatively low because in September analysts’ estimates for the report tend to be relatively on target based on how they calculate the number.
Moreover, the key to remember with jobs report days boils down to three basic things: 1) The market historically hasn’t been happy with big surprises ($100K jobs above or below expectations), 2) opening gap reversals are fairly common, and 3) more often than not a weak report and gap down frequently provides a good buy setup while a strong report and gap higher does not. Tomorrow will be somewhat tricky because we also have two wildcards in play: 1) the two-day short-squeeze leading into the report this week and 2) the trading volume the day before Labor Day weekend is likely to be thinner than a super model.
The good news from all of this that after today we’ve got a lot of room to digest a really awful report tomorrow and still be in fairly good shape technically. Traders like me who are carrying long positions overnight and into the report are going to raise their stops from the 10 day moving average to just under the 50 day moving average at S&P 1,081. Likewise, I suspect if we push higher again tomorrow, sights will be set on S&P 1,100 if for no other reason that it is a nice round number and it is also the area where the market stalled out in the last reversal. I have market both of these areas with a white line in the S&P chart above for reference.
Looking beyond this week’s jobs report, next week is a four-day trading week and you already know how I think about those – they tend to be the toughest to trade profitably. So, if you’ve had a great week so far, don’t feel bad about starting the holiday one day early. Likewise, if you’ve had a terrible week so far, the same is also true. Let the thinning herd duke it out tomorrow and go enjoy your holiday. Unlike the first day of the month setup, tomorrow is a much tougher setup primarily due to the wildcards involved. Not to mention that no matter what happens, we’ll still have our hands full after the holiday. |
评分
-
3
查看全部评分
-
|
狗仔卡
发表于 2010-9-2 07:01 PM
提升卡
置顶卡
沉默卡
喧嚣卡
变色卡
发表于 2010-9-2 07:10 PM
Nice read!
谢谢