We stated that the expected read of -173K looks to be on the high
side of optimistic on NFP jobs, and as tenured traders know, this
release has no peers in regard to missing it's mark. Roll up, roll up,
the NFP just hit with 193K job losses, and a 10.3% Unemployment rate
that really will test the resolve of those looking at the economic
recovery as anything other than a roller coaster ride for the next 18
months. The reduction in jobless from -263K is the positive, and in a
report that has a lot of guess-work in it, the 10.3% unemployment may
curry favor on Friday. Take extreme caution on anything taken right now.
Dollar Index: The 76.00 area now becomes the swing-point for the
dollar index. A four hour close above/below that price point signals
which way the market is willing to test the value of the Usd. Swing
Point: 75.90
S&P Futures: The 1072 and then 1082 areas on the S&P are the
near-term tops, that may see things retreat heavily from after the NFP
numbers. The 1047 support area looks solid. Swing Point: 1055
Crude Oil: 80.20 and 81.05 are the topside numbers on
crude oil trade, with 81.75 above that. There is a lot of noise at the
78.50 area gets tested after NFP, with 77.50 and 76.50 under there.
Swing Point: 79.80
Gold: 1075 on gold trade will be near-term support, and that area
will back any long tests of 11100. The short side is protected by 1065,
but as the market trade long gold as a hedge, it seems that the gold
bugs will dominate. Swing Point: 1089
Labor Market Still Bleeding
The labor data numbers released for
October are rather poor, with the economy shedding another 190K jobs,
from which 120K were from the goods-production sector. However, the
infamous death/birth model added another 86K jobs to the economy in
October, taking the total number of jobs added to 641K so far, this
year.
The unemployment rate surged 0.4% in October from the
prior month, to reach 10.2%, the highest unemployment rate since April
1983. At the same time, the total unemployment rate, also known as U-6,
had surged to an impressive 17.5%, up from 11.1% just one year ahead.
The
rising unemployment rate coupled with companies that still shed jobs
can only have a negative effect in the real economy, reducing consumer
spending that makes up about 2/3 of the GDP.
This report had a
strong initial effect on the global markets, with S&P futures
bouncing off the 1060 resistance and with the Usd/Yen yen falling 60
pips, down to the 90.00 area. In the commodity market, a bleeding
economy means that less energy is needed, something that allowed crude
oil shed $2 in a relatively short period.
Just ahead of the
NFP report the market absorbed data from the Canadian labor market that
also came in weaker than excepted for the month of October. To some
extent, this shows the degree to which the two economies are connected.
The
weak labor data coming from Canada and the U.S. had a negative effect
on the value of the Canadian dollar, which dropped 130 pips, after
being in a 60-pip range over the last two days of trading.
Gold Bugs Still Moving
Gold is trading in a solid up-trend channel, as seen on the 1 hour
LFB Chart review, where the recent wave IV may have just been
completed, around the 1085 trend line support. As such, a move towards
the 1110 target may already be happening, especially since the previous
wave III highs were already taken out.
TheLFB Charting: 1 Hour Gold
Any break of the wave IV lows and trend line support will signal a near-term bear market.
