Moving Up!
There was a sharp rally in the S&Ps this morning after a relatively tame Non-Farm Payroll Report. S&Ps rallied on Globex to 1540.20, up 1900 points, before giving some back. With 25 minutes to go in the Globex session, S&Ps were at 1536, up 1500, on heavy volume. Over 4000 contracts already traded.
There was a significant buyer this morning after the report on Globex between 1537 and 1534 for nearly 450 contracts. At 9 a.m., NAPM will be released with the August reading. This number now has significant influence on the session with a consensus at 52.
Any reading below 49.5 should sharp another leg to the rally. On the flip side, only a reading above 55 would dampen the enthusiasm.
We have been looking for a Labor Day rally to take us into the fourth quarter with the opinion that the Fed is done with interest rate hikes. We believe after the weekend, the volume and volatility will pick up.
For S&Ps today, our 1530 target was made on Globex at the opening. The market needs to stay above 1533 to remain bullish and extend this leg. Above 1533, we have 1536 (where we currently are), 1540.40, 1543, 1545, 1548.50-1550.
On the downside, we have 1532.50, 1530, 1528, 1525.50, 1523, 1520, a key at 1515, and a major at 1513.
The NASDAQ is currently trading at 4178, which places it up 86 handles. We briefly went limit bid at 4186. Volume is over 1000 contracts in very strong action. If you take the move from 4523 to 2975, an 88% retracement of that move comes in at 4337. Under that, an 80% retracement comes in at 4213.
We expect 4210-4225 on the top side to be resistance. Here are our support areas (adjusted for the gap open): 4160-4154, 4135-4130, 4115-4098. If we get below this level, you would be filling the gap, and it would most likely have negative connotations for the market. The next level is between 4054-and 4037, then the psychological 4000 number.
On the upside, 4188 up to 4225 is resistance. We then expect it to be a choppy trade in the entire 4200-handle.
There is one disturbing trend for the Dow: yesterday the cash fell short of its recent high by 9 points and then sold off 90 points in the last hour. JPM, up 16, was able to offset much of the internal damage in the index. Today we should see more of the tug-of-war between stocks that are bullish in the down and those that are bearish.