Bulls go back to work minding yesterday’s gap with a gold medal style performance following strong jobs data. As of 11:15 ET the SP-500 (SPY) is up 2.0% and swimming up The Channel towards a key test of 1400.
For once in a blue moon or two and much to the delight of bulls, ADP private payrolls data enjoyed a less volatile correlation with this morning’s BLS jobs data. By the numbers, nonfarm payroll figures for July proved much stronger-than-forecast in creating 163,000 jobs or at least more pleasant-looking data compared to estimates of 100,000. June data also saw an upward revision, while rounding out the sigh of relief, private jobs rose by 172,000 versus 105,000.
“Flushed out of view” or “Have their cake and eat it too?” A growing pool of those seeking work versus those making an exit saw unemployment rise by one-tenth of a percent to 8.3%. The figure marks the 41st month above the undesirable 8% level indicative of an economy still going nowhere, but more optimistically, not down the loo and back into a recession either.
The potential good news regarding Friday’s uptick in unemployment is the increase could open the door to additional monetary stimulus by the Fed following Wednesday’s disappointing FOMC meeting which failed to deliver the goods to bulls.
In those intertwined markets of influence and notice, aversion to popular safe havens the US Dollar (UUP) and 20-Yr (TLT) are resulting in technical damage to those uptrends. Losses of 1.20% and 1.90% are breaking 50SMA supports as investors move back into their fast money, “risk-on” motif operandi.
The SP-500 is minding yesterday’s bearish gap test of channel support with bulled up passengers hoping over that obstacle to fresh intermediate highs. Technically, the broad market proxy is less than 0.50% from a test of key zone resistance of 1400 – 1422.
Friday’s jobs data has given bears in Europe’s country indices (EWG, GREK, EWI and EWP) and the EUR/USD a jolly good rogering. The latter currency pair has stormed higher by 1.70% and set for its highest close in nearly a month, while our “coarse bourse” proxies are enjoying gains of about 4.5% to 8.0%.
On the commodity side, the US Oil Fund (USO) is gushing higher to a relative strength gain of 4.0%. Unconfirmed saber-rattling out of the Middle East and a dyed-in-the-wool belief, per CNBC, that today’s labor report will translate into increased demand by consumers and businesses, are acting as primary drivers in supporting oil prices.
Comex Gold (GLD) is up 0.85% but lagging the broader market. The metal is benefitting from a weaker Greenback and possibly bulls picking up the technical pieces from a slightly tricky three-day pullback, but failing to enjoy the increased demand shtick of the black gold proxy.
And the iShares Bull ETF (AAPL) are up but also trailing Friday’s feel good gains and games. Today’s tallied increase in shareholder wealth of just 1.20% is sure to irk more than a few market types given Apple’s massive weighting and correlation but a company whose shares are likely being held somewhat at arm’s length due to a contentious patent battle with Samsung.
On the corporate confessional side, on a day when the jobs picture seems a bit brighter than expected, LinkedIn (LNKD) reported it’s doing its part to get job seekers gainfully employed or at least bide their time on the internet.
The business / jobs networking site posted in-line profits of $0.16 per share, stronger-than-forecast revenue growth of 88.6% on sales of $228M versus estimates of $216M and issued upside, above-views FY12 revenue guidance of $915M - $925M compared to the Street’s $907.51M. Intraday, mostly out-of-work daytraders and busier-these-days, High Frequency Traders, have helped send shares up 14%.
Also on today’s menu of very, varied but nonetheless well-received earnings reports, shares of Procter & Gamble (PG), Kraft (KFT) and Fluor (FLR) are up amongst Friday’s more influential companies and / or brands that moms and apparently bulls love to hoist up with Olympic sized gains of 3.5% to 5.0%.
Finally and in those sometimes accurate heat-seeking option markets, the VIX ($VIX) is off about 7.5% and near 16%. Today’s pressure puts the sentiment gauge to a test of two week and July and showing confidence bordering on bravado with a differential of 12% relative to its mean-reverting 10SMA. The unsurprising offer comes as this week’s final uncertainty is happily removed from the market by yesterday’s modestly on edge investor—and one now much more optimistic about the prospects for 401Ks, IRAs, maybe the global economy and definitely looking for a bit of weekend decay.
Senior Options Writer, former Market Maker & fulltime Option Hedge Hog Advocate
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