Market Acceleration on Artificial Jobs Report

From 1990 to 1997, Kevin Haggerty served as Senior Vice President for Equity Trading at Fidelity Capital Markets, Boston, a division of Fidelity Investments. He was responsible for all U.S. institutional Listed, OTC and Option trading in addition to all major Exchange Floor Executions. For a free trial to Kevin’s Daily Trading Report, please click here.

The +1.4% SPX gain Friday enabled it to finish the week at +3.1% to 1138.70, and in the black YTD at +2.1%. The futures took off after the 8:30AM jobs report of -36,000, versus an expected -65,000, but what the CNBC empty suits neglected to say was that that number included 15,000 census workers, and a Birth/Death Model estimate of 97.000 jobs, and that number is usually pure fantasy. If you add both off those back in you get a more realistic number of -147,000, and if we say the BLS estimate is right for at least 50% of the estimate you still get a -100,000 number. The government is expected to hire close to 1 million census workers, so that will be inflating the numbers in the months ahead, but Obama and Reid will still jump on the TV and tout the number without the adjustments, just like they did first thing Friday morning.

It wasn’t a good trading day Friday for day traders because almost the entire rally was over after the futures initiated gap up opening when the SPX hit 1134.97 on the 10:25AM bar, and then traded in only a 1.85 point range between 1135.13 and 1133.54 until the 2:40PM bar when the SPX bounced a few points into the 1138.70 close.

It was obviously technically positive that the SPX took out the 1121 resistance again, which is the .50RT to 1576 from 667, and also includes the 1119.41 .707RT to 1150.45 from 1044.50. The SPX will most likely now take out the 1150.45 cycle high seeing that the ^IWM^, ^MDY^, and COMPX have already made new cycle highs. The INDU went out at 10566.20 versus its 1/19/10 cycle high at 10,729, so that should also get taken out seeing that the ^DVY^ took out its 1/19/10 45.08 cycle high on Friday, and closed at 45.36 Also, the ^XLI^, ^XLY^, ^XLP^, ^RTH^, and ^IBB^ have already made new cycle highs.

However, the market is ST-O/B and the SPX up 6 straight days, in addition to some some key time symmetry this week measured from the 10/11/07 1576 bull cycle top, and the previous two SPX highs on 10/21/09 and 1/19/10, so any new high in the SPX or INDU will most likely make a quick reversal and then pull back to alleviate the ST-O/B condition before it has a chance to sustain new high levels above SPX 1150.45.

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