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Will Markets Follow Usual Pattern Post Jobs Report?

  • Written by Syndicated Publisher No Comments Comments
    July 7, 2013

    As many of you know, I have always referred to the Labor Department’s monthly jobs report as The Big One! I do so because of its history of most often coming in with a surprise in one direction or the other, which results in a one to two-day triple-digit move by the Dow in one direction or the other.

    The rest of the pattern is that whatever is the direction of that initial kneejerk reaction is often reversed over subsequent days, and the market goes back to whatever was its focus prior to the jobs report.

    For awhile yesterday morning it looked like the initial triple-digit move was not going to even last through the day.

    I got a kick out of Art Cashin’s comments yesterday.

    The Dow spiked up 135 points in the first few minutes of trading yesterday in response to the Labor Department’s jobs report. But it almost immediately reversed and plunged 150 points from that high and was in negative territory by 15 points by 10:30.

    Asked how he would explain the sharp reversal Art Cashin, director of NYSE floor operations for UBS, said the big players and heads of Wall Street institutions were at their estates in the Hamptons for an extended long weekend, leaving their operations and trading in the hands of their assistants. And when they saw the buying that was spiking the market higher, the calls probably began coming in from their bosses in the Hamptons, saying. “Are you guys nuts? Stop buying stocks!” and the market immediately plummeted when they closed out their positions.

    Funny. But it doesn’t explain the afternoon recovery to a very positive close.

    One thing for sure, there weren’t very many participants, with only 0.6 billion shares traded on the NYSE for all that in, out, and back in activity.

    Interesting juncture for markets.

    The S&P 500 closed above its 50-day m.a. yesterday. So is the breaking of the rising trendline of the rally from November only temporary?

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    Or is the market up against trendline resistance in its pattern of lower highs and lower lows since the May top?

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    Global markets seem to also be at an interesting juncture. Will the 50-day m.a. be resistance, or can markets break through and go on to higher highs?

    They had better not break down from the m.a. to any degree as it would leave a potential head and shoulders top forming.

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    Are we eating and drinking too much?

    Regarding jobs, Zero Hedge points out that restaurant and bar employees hit a new high of 10,339,800 workers in June.

    Meanwhile, as the chart shows, manufacturing jobs have moved steadily overseas since 1980. Their numbers have dropped from 19 million in 1980 to fewer than 12 million.

    FRED Graph

     

     

     

    To read my weekend newspaper column click here:  The Good Jobs Report Does Not Offset the Many Negatives!

    Subscribers to Street Smart Report: See the charts and recommendations in the subscribers’  ‘Premium Content’ area of this blog. The next issue of the newsletter will be out on Wednesday.

    Images: Flickr (licence attribution)

    About The Author

     

    Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

    It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.

    It provides two model portfolios as guides. One is based on ourSeasonal Timing Strategy, one on our Market-Timing Strategy.

    In depth updates are provided every Wednesday, with interim ‘hotline’ updates every time we make a trade. An 8-page traditional newsletter Street Smart Report is provided on the website every 3 weeks, in pdf format for viewing or printing out.

    There is the Street Smart School of online technical analysis ‘seminars’,commentaries to keep you ‘street smart’ about Wall Street, and much more. 

     

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