Today, Thursday, was another example of how a good gap down is the often the best way to prevent a down day. As you may recall the market did NOT gap down, and that's exactly my point from yesterday. Today, the markets opened quietly unchanged and then, depending on the index, drifted higher or lower until more bad economic data hit the tape at 10:00.
With bad news from the ISM weighing on trader sentiment, and no early gap to satisfy the bears and/or feed the bulls, the market began a slide which it would spend the rest of the day helplessly attempting to reverse.
The weakest of the market watch indexes, IWM, suffered the worst falling 1.55% vs. a mere .45% decline in the DIA. In the end, 3 of the 4 remained in their bull phase and all four closed within the boundaries of their consolidation ranges. However, it is noteworthy that they are all at the bottom of their trading range as we go into the news they've all been waiting for...
Friday is the big day. Jobs data reported at 8:30 will drive the direction of the markets. With all the bad news the market has received this week it seem unlikely that the jobs data will be surprisingly good.
But which way will the market go if the report it better or worse than expected?
As always I'll let the location of the opening range and its subsequent price action guide our trading. You'll see in today's stock picks that I've prepared you for a market that is disappointed or positively surprised. However, don't let the actual news distort your interpretation of the market's message!
For example, I will not be surprised if the jobs data comes in "as expected" and the market rallies. Worse than expected, I'd expect a big down open which may or may not follow through. With a better than expected report I'd expect a big up open, but I'm not sure the gap will not be sold leading to a disappointing day for the bulls.
I don't know how the news will move the market, but I do know that the market will quickly tell us what it thinks of the news, and that is more important than what we think of the news. Listen carefully to the market.
Since this particular jobs data announcement creates an incredible number of potential outcomes for each of the ETF's we usually cover in this report, I will only cover the four major stock in index ETF's.
My ETF comments are based on the following logic. If the market is trading above its 30-minute opening range I will have a bullish bias, and below the 30-minute opening range I'll have a bearish bias. In addition to that intra-day bias, I will give the market another weighting on my bias based on where the market is trading within the context of the daily chart.
Below are my price levels for being bullish or bearish. If the market is not beyond either a bullish or bearish level then I'm neutral.
All of the picks have negative stack so they are candidates for OR Reversals too as long as they are below R1.
GS
BG
CMI
NUE
X
PAY
UPS
NVLS
KLAC
ADSK
TROW
DOV
