The jobs report delivered a small beat on non-farm payrolls but the unemployment rate rise unexpectedly thanks to a small uptick in labor force participation. The NFP payrolls number came in at 175,000, above the 164,000 expected, while the always-misleading unemployment rate grew to 7.6%. NFP revisions from March and April basically cancelled each other out. An important devilish detail to note is that the manufacturing sector shed 8,000 jobs on the heels of Monday’s worst ISM reading in four years, a sign that the all-important sector is headed in the wrong direction. Government jobs also fell once more.
Futures have responded positively to the report, so I guess perhaps we are entering a more rationale environment where “good data is good news,” rather than the “bad data is better news” dynamic that has proliferated because of QE. Let’s see if the market how the market responds off the open though, as that interpretation could change. I do think that perhaps this was the perfect jobs report for the market at this stage. It beat expectations, so it is a good sign that the recovery is continuing at at least a modest pace, but it isn’t so good that the Fed could rush to trim its QE pace of purchase earlier than expected.
Watch the sectors that held up best during the pullback to see if they lead a move higher. The banks are one such group, and they saw impressive reversals yesterday that could further support a case for a bounce. Gold (GLD) is selling off sharply after the report as good data could hasten the Fed’s tapering of QE, which has been the principal bullish catalyst for the precious metal over the last several years.
Below is last night’s Off the Charts newsletter where we share some of our favorite actionable chart set-ups, as well as analysis on broad indices and key sectors. Here is another chart this morning highlighting short-term levels to watch on the SPY chart. This morning the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is set to challenge short-term Resistance 2 at $163.81 in the pre-market, let’s see if it can push above it.
Scott Redler has been trading equities for more than 10 years and has more recently received widespread recognition from the financial community for his insightful, pragmatic approach. He began his career as a broker and venture capitalist where he was able to facilitate relationships that led him into trading. Beginning his trading career at Broadway Trading in 1999, Scott moved on with Marc Sperling to Sperling Enterprises, LLC after establishing himself as one of the best young traders in the firm. As a manager at Sperling Enterprises, he maintained his status as a top trader in the industry while working closely with all traders in the firm to dramatically increase performance. Scott has participated in more than 30 triathlons and one IronMan triathlon, exhibiting a work ethic that also defines his trading. His vast knowledge and meticulous attention to detail has led to regular appearances on CNBC, Fox Business and Bloomberg, and he has been quoted in the Wall Street Journal and Invest.
Scott is currently the Chief Strategic Officer of T3 Live and is a Registered Associated Person of T3 Trading Group, LLC.