Fed Speak this Afternoon. Waiting for CPI numbers this week.

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Our View

I admit I don’t know enough about how economic reports get leaked, but I’m confident they do—especially when it comes to the most important economic indicator in the US: the monthly jobs report. If you don’t believe it, then how the hell did the Bureau of Labor Statistics make one-third, or 818,000 jobs, just disappear? No one ever really explained that, and no one will explain how all the major banks were expecting 140k nonfarm payroll for the September jobs report.

And what happens? Nonfarm payrolls increased by 254,000 jobs last month, revised up by 17k in August, and then by another 55k—the most since March. Coincidence? Or just another sign that the economy is humming along? Well, we’ll know a little more about that when the CPI number is released on Thursday.

MiM and Daily Recap

The ES made a low at 5741.00 and rallied up to 5768.00 at 7:32 AM, then traded back up to 5766.25 at 8:26 on total Globex volume of 118k, just before the jobs report. It then traded up to 5803.25 at 9:02 after the September jobs report showed strong employment numbers, with nonfarm payroll employment jumping by 254,000 in September. The unemployment rate dropped to 4.1%, with revisions of +72,000 for July and August. After reaching the high, the ES sold off down to 5791.00 at 9:29 and opened Friday’s regular session at 5793.50.

After the open, the ES traded up to 5796.00 and then sold off down to 5785.75 at 9:34. It then rallied 11.75 points to 5797.50, before selling off 29 points down to 5768.50. The ES rallied 13.25 points to 5781.75 at 10:09 and then dropped 25 points down to 5756.75 at 10:11. After that, it rallied 23.5 points to 5780.25 before falling 30.75 points to 5749.50 at 10:32. The ES rallied 27.5 points up to 5777.00, then sold off down to a higher low at 5752.00 at 11:33, and rallied 25.75 points up to 5777.75 at 12:05. It then pulled back 14 points down to 5763.75 at 12:27 and rallied 22.5 points to 5786.25 at 1:21.

After the rally, the ES sold off 20.5 points to 5765.75, rallied 20 points to 5785.75, and then dropped 18.75 points to another higher low at 5767.00 at 2:18. It rallied 18.75 points to 5798.00 at 3:35, which was 31 points off the 5767.00 low. The ES pulled back to 5792.50 at 3:48 and traded up to 5796.75 as the 3:50 imbalance showed $90 million to buy. It then traded to 5799.50 on the 4:00 cash close. After 4:00, the ES traded up to 5804.75 before selling off to 5794.50 and settled at 5795.50, up 50.5 points or 0.90%. The NQ settled at 20,227.25, up 237 points or 1.19%. The ZBZ4 (Dec bonds) settled at 121.31, down 1.15 points or 1.19%, and the ZNZ25 (10-year note futures) settled at 112.270, down 1.020 points or 0.93% on the day.

CLZ settled at 73.68, up 0.51 points or 0.70%. GCZ (Dec gold) settled at 2,667.80, down 11.40 points or 0.43% on the 5:00 futures close.

In the end, everyone was sold a bill of goods. After two revisions, the jobs number came in way higher than expected. The ES and NQ took off, while the 30-year bond and 10-year notes tanked. I know I say this a lot because it’s true, but the Fed fudged the numbers. Why? Because it’s an election year, and they don’t want the markets to go down. In terms of the ES’s overall trade, volume was higher at 1.45 million contracts traded.

Technical Edge

Good Reads:

Investors may have opportunities to buy the dips in the stock market – Goldman Sachs

Economic Calendar

Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.

Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!