Another heavy-hitting econ event to watch.
Follow @MrTopStep and @BretKenwell on Twitter and please share if you find our work valuable.
Don’t Forget: The Long-term performance of the S&P 500, some longer-term setups, and 5 red flags that showed up before the 2022 bear market.
Our View
It feels like one thing after another these days. FOMC statement, earnings, jobs report, etc.
Well as you all very well know, today is the monthly jobs report for October. Economists expect about 200,000 jobs to be added for the month.
Right now, good news is bad news and bad news is good news for the stock market. Here’s how the report just came in:
This morning we sent a “Part 1” for the Opening Print to premium subs outlining support, resistance and what to expect from the report.
As for support, we highlighted 3715 again, which is the 50% retracement. That level held as the ES quickly tagged 3710 right after the print and as of 8:38 — yes, just a couple of minutes later! — it’s trading 3760+
Now I don’t expect the ES to go straight up from here and yes, you do have to be lightning quick to catch a move like that. But let me just say, if you happen to catch 50+ handles on the ES before the market even opens, my advice would be just go enjoy your day.
You’ve already made a wad of cash and the last thing you want to do is let the algos milk it back from you.
For everyone else, let’s strap in, because there’s always the possibility of a FRY-day on tap.
Our Lean — Danny’s Take
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.
Our Lean: 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.
So far the 3715 area continues to hold as support. Yesterday’s low was ~3704. This morning’s low is ~3711. If these levels fail and the ES breaks below 3700, it could open the door to 3685, then 3650.
On the upside, watch 3770 as potential resistance. That’s the post-jobs report high. Above that and I have 3785 to 3795 marked on my screens.
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
Comments are closed