Mixed and currently disappointing jobs data puts bulls on the defensive for a second straight session. As of 10:55 ET the SP-500 (SPY) is off 1.13%, but will investors find stimulus from Bullnanke & Co or one red, but maybe delicious Apple?
After a defiant start to kick-off the month, a second day of aggressive profit-taking in the broader averages is further confirming “Sell in May” historical tendencies. In the spotlight Friday and much to the chagrin of apparently disenfranchised bulls, is the closely-watched and now well-played, mixed monthly jobs report.
By the numbers, for April the Bureau of Labor and Statistics announced weaker-than-expected nonfarm payrolls growth of 115,000 versus forecasts of 162,000. Private jobs creation also missed views with an increase of 130,000 compared to estimates of 167,000.
While not altogether a surprise given Wednesday’s volatile ADP miss, those pinning their hopes on decent employment data based on this week’s national PMI beat, have been delivered a bit of a disappointment.
For today’s bull minority, both March and February employment data did see upward revisions of 34,000 and 19,000 to 154,000 and 259,000 respectively. And at the same time, unemployment dipped by one-tenth of a percent to a three year low of 8.1%.
The bad news in Friday’s unemployment downtick is the beat reflects roughly 350,000 dropping out of the labor pool rather than robust hiring expansion for job seekers.
The potential good news or upside to today’s report is the trend of reduced job creation could be the sort of anecdotal economic evidence required for Bullnanke to make good on his recent “prepared to do more as needed” remarks and another round of quant easing.
In those other sometimes intertwined markets of influence, the US Oil Fund (USO) is leading to the downside for a second and rather slippery session with losses of 4.30%. Friday’s stiff pressure has broken ten weeks of constructive consolidation work and has the oil proxy challenging its 200SMA for support.
On the heels of Thursday’s frown by OPEC stating it was “unhappy with high prices”, bulls in USO are reacting to Friday’s payrolls data as adversely impacting demand and easing fears of a protracted standoff with Iran in front of talks with the West later this month.
Amidst today’s vote by investors favoring economic gloom, the US Dollar (UUP) is responding with a modest 0.25% bid after two days of consolidating on top of its 200SMA; though finding its gains capped by its 50SMA. Those sometimes but not-of-late precious metals gold (GLD) and silver (SLV) are interestingly enough flat on the session. The stalwart behavior comes despite the negative impact of bid in the Greenback; and one resting on investors weakened outlook for the global economy.
And the iShares Bull ETF (AAPL) is showing respect for gravity and storied trader lore of all gaps eventually getting filled. Apple stock is currently off 2.10% and just removed from potential “red delicious” lows 568.27 which have all but filled its earnings-related price gap of 567.69 and 8% removed from its “iPop!” highs.
On the corporate confessional side, with Friday's jobs report raising the question about the health of the labor market, last night's top and bottom-line beat and raised outlook from web-based business networking giant LinkedIn (LNKD) seems somewhat obvious. Bulls are showing obvious appreciation as well with shares up about 8.0% after gapping to all-time-highs out of a classically-crafted weekly cup with a slightly unorthodox handle.
Finally, the CBOE Volatility Index ($VIX) is up about 6% near 18%. Despite the bid, the action is far removed from signaling any type of short-term fearful extreme relative to its 10SMA and for that matter, still well south of recent April highs near 21% tied to the market’s corrective lows. About the only thing we can say bullishly about the VIX, from a contrarian standpoint and regarding investor fear is in front of the weekend, the bid reflects a willingness to pass on trying to optimistically collect time decay from the market via currently out-of-favor strategies such as buy-writes.
Chris Tyler
Senior Options Writer, former Market Maker & fulltime Option Hedge Hog Advocate
Optionetics.com ~ Your Options Education Site
Visit Chris Tyler’s Forum
The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual.
