Here’s What’s Special About Friday’s Employment Report

  • October 8, 2004
  • Chris Curran

Stock
index futures opened Thursday’s session with small downside gaps amid
new highs in crude oil and sluggish retail sales numbers, and overshadowing news
that weekly jobless claims had dropped more than forecast.  The session quickly
turned into almost a mirror image of Wednesday, first leaving the gap unfilled
to head south, chopping through the lunchtime lull, and then breaking down to
new lows in the last hour.

The
December SP 500 futures closed out Thursday’s session with a loss of -11.25
points, while the Dow futures gave up -116 points.  Open interest contracted on
Wednesday’s up move, giving a good heads-up that the game of musical chairs was
about to take a pause. Looking at the daily chart, the ES posted a market
structure high with immediate support at its broken downtrend line in the 1128
area.  The YM posted a bearish engulfing line and settled at its 50-day MA and
its 50% Fib retracement of last week’s low to Monday’s high. On an intraday
basis, 60-min and 30-min head and shoulders necklines were broken. 

               

December
bonds continued to sag despite the drop in jobless claims and broke the 50-day
MA. The SOX posted its 3rd doji in a row and continues to hold a tight trading
range.

Friday morning at 8:30 ET gives us the
highly-anticipated September Employment Numbers, which are expected to show an
increase in Non-Farm Payrolls of 150,000 and the Unemployment Rate to remain
steady at 5.4%.  However, this report may have an ace up its sleeve for those
who have been “pooh-poohing” the jobs recovery (and you know who you are). 
What’s special about this report is that every October, the Bureau of Labor
Statistics releases a snapshot of its annual statistical “benchmarking,” where
it goes back and revises job statistics as far as 18 months ago. 
Over the last 25 years, these
revisions have been upward during times of strong growth and downward over times
of weak growth. And past revisions have also been quite large. Considering the
growth in the economy over the last year, it wouldn’t shock me to see an upward
revision of between 500,000 and 1 million jobs.  If that happens, this supposed
“jobless recovery” won’t look so jobless anymore.

 

 

Program Trading Levels

Fair Value – 0.42

Buy Program Premium – 1.49

Sell Program Discount – (0.54)

Closing Premium – 0.75

Closing Bias – If the futures gap down at the
open, watch for a retracement up towards the gap fill.

 

Please feel free to email me with any questions
you might have, and have a great trading week!

Chris
Curran

 

 

 

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