The markets did not tip their hand into today’s event.
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Don’t Forget: We recently noted the long-term performance of the S&P 500 (and what that means for investors and traders), and we also took a look at some longer-term setups for those interested.
Our View
The news cycle just won’t stop:
- The Fed says inflation remains stubborn and that it justifies future rate hikes and a longer tightening cycle.
- For the first time since August, mortgage rates fell
- UK bonds tumbled after the BoE stopped buying long-dated bonds as part of its rescue plan
- Chevron faces an uphill battle to restart oil production in Venezuela based on years of instructor neglect
- A Delaware judge presiding over the Elon Musk and Twitter trial postponed a trial on Thursday and said if the two parties can’t agree, the case will be set for trial in November
- Gas prices are going back up after a 100-day decline.
While this is only a few headlines, it’s just a small example of the never-ending level of news right now. Sure to cause even more headlines? Today’s monthly jobs report is due up at 8:30 am ET.
Our Lean — Danny’s Take
I don’t think the markets act all that great. If the ES gaps higher off the 9:30 open my lean is to sell it. If it goes up after I get short I still want to sell it.
Jobs FRY-day tend to be rough and after the last few days of failed rallies it could end up a rough one if the market doesn’t react well to it. If the ES gaps sharply lower, I may look to buy it on (or near) the open but ideally, I prefer to sell the gap-up just based on how it acts. Or sell the 30 to 40 rips.
On the upside, we’re watching 3800, 3820, and 3850.
On the downside, 3750 remains key support. Below 3740 could put 3725 in play, then 3700 (or lower). The technical section below breaks down the “why.”
If the ES really breaks down, we could erase all of Tuesday’s gains (sub-3686), while a weak close sets us up for lower prices next week.
Daily Recap
The ES sold off down to 3763.75 on Globex and opened Thursday’s regular session at 3780. After the open, the ES printed 3777.50 and quickly rallied up to 3794.75, back and filled at the vwap at 3789.50, and then shot up to 3811.50.
That high set up a ~29-point drop down to 3761.50 at 10:11. After the low, the ES rallied up to 3776.25 and then dropped down to a new daily low at 3758 at 10:35 and then rallied up to 3792.75 at 11:22.
After dropping down to the 3779 level, the ES rallied up to 3794 at 11:53, sold back down to 3763.25, rallied up to a lower high at 3787.50, and then sold to a new low at 3750.75 at 2:50. After some chop, the ES rallied up to 3770.25 at 3:30 and dropped down to 3759.75 at 3:46. The ES traded ~3760 as the 3:50 cash imbalance showed $140 million to buy and traded 3756 on the 4:00 cash close, down 37 points or about 1%.
In the end, I told the MTS forum early on that I didn’t like the price action. In terms of the ES’s overall tone, it was choppy and weak. In terms of the ES’s overall trade, volume was steady at 2.1 million contracts traded.
Technical Edge
- NYSE Breadth: 28% Upside Volume
- Advance/Decline: 29% Advance
- VIX: ~$30.40
Game Plan: S&P, Bonds
The action has been choppy over the last few days. Thursday was clearly a theta-burn day as the markets toiled around with an inside day ahead of the jobs report.
Speaking specifically on the S&P, it did enough to stay above key support, but didn’t do anything to encourage the bulls, IMO. In other words, it’s setting up for today.
I don’t want to talk too much, as the jobs report could make or break any setup. I will map the S&P as usual and send an update as needed.
A strong jobs number doesn’t bode well for stocks, but if the market can generate bullish price action off a strong headline number, maybe the rally can continue.
Let’s end the week on a great note. Cheers!
S&P 500 — ES
Keeping things simple: ES is holding the 10-day and last week’s high at 3751 (albeit, barely). If it pushes higher on the report, 3800 is in play, but mostly, all eyes will be on 3820.
That’s the two-day high and where the 21-day moving average comes into play. Above that puts 3850 on the table.
On the downside, a break of 3740 and failure to regain it could put 3726 in play, then 3700 or lower.
SPY
Holding 372.50 and not tipping its hand all week ahead of the NFP report.
If we break this area and can’t reclaim it (or gap lower on the open) see how SPY handles the $365.50 to $368 region. That’s the 50% to 61.8% retrace zone.
On the upside, ~$380 has been resistance, with the 21-day just above it. A breakout over this area puts $390 on tap.
Bonds — TLT
If the rally in stocks depends on the performance of bonds, TLT is not sending a very great sign.
Active resistance continues to squeeze the TLT lower, while $105 is acting as a ceiling. A break of last week’s low puts par in play at $100.
If we rally today, the gap-fill from Wednesday is at $103.30, alongside the declining 10-day.
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.
Notes:
MCK — weekly-up triggered from our buy list. $360 to $362 is our first upside target. $346 is a reasonable stop-loss for those long from the weekly-up level of $351.
Relative strength leaders →
Top:
- LNG — nearing the breakout near $150 — Monster Reaction
- MCK — holding the breakout near $340
- CAH — holding the breakout near $64
Here’s a quick look at the stocks above (in the Opening Print Twitter Community).
- FSLR
- ALB
- VRTX
- CYTK
- CELH
Economic Calendar
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