Brian’s market recap for Friday: Beyond the jobs numbers

MrTopStep.com

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Yesterday's drop in the initial claims data laid the groundwork for some hopeful, optimistic chatter regarding today’s non-farm payrolls number. However, one of our sources dug a bit deeper, beyond the headline data, and shared the following observations: U.S. non-farm payrolls increased 146k in November from a revised 138k October jump (was 171k) and a 132k pickup in September (was 148k), for a net -49k revision. The unemployment rate fell to 7.7% from 7.9% as household employment fell 122k and the labor force dropped 350k after each posted sizeable gains the two previous months. Private payrolls increased 147k, but the three main categories all saw job declines with the goods producing sector at -22k jobs, while manufacturing was -7k and construction at -20k. Employment in the service sector climbed 169k. Government shed 1k, while October was revised lower to -51k from -13k. Earnings rose 0.2% after a flat print in October. The workweek was steady at 34.4 hours. Look where most of the gains were: Priv. Service providing 169, Trade, transport 69 and the Retail trade 53. This perhaps suggests the gains were ALL holiday-driven part-time jobs. While the drop in the participation rate (civilian labor force dropped 350k) suggests, as ever, that the decline in the unemployment rate is effectively irrelevant. I apologize for the technical nature above, but employment/job creation is the driver of the economy and the fiscal cliff and Obamacare debacle is handcuffing our business leaders.

Today’s observations: S&P traders noted, there is a TON of uncertainty with this data and in Washington; Hurricane Sandy, skewing it for political purposes... So no one wants to hazard a guess, gotta be careful.

There is some conjecture over the number of jobs required to be generated to keep pace with population growth.  The U.S. population grew at a pace of 228,000 per month between 2000 and 2010 and, after excluding  the 23.7% of the population under age 18 and the 13.3% of the population over 65 per this Census Bureau summary page, you get a monthly increase of 143,000 for the “working age” population. As it stands, the U.S. simply isn't creating enough jobs to keep pace with population growth as the U.S. economy appears to be just barely treading water at this point. Source.

Who? Vice President Biden: The administration is prepared to respond to any serious fiscal cliff deal from the Republican side. However, top rates must rise. U.S. economy has turned a corner, trajectory is headed in the right direction. I have to ask, at this juncture who or what do you believe?

Fiscal cliff chatter, more traders and people are talking about the likelihood of going over the cliff.  Democrats are trying to avoid Medicare cuts. I am taking it seriously. William shared: that is a plausible strategy for dems, can't beat a barrel of ink with a pen. President Obama blew the downgrade debt ceiling talks and did not wear it per Bob Woodward on $400bil he asked Boehner for. The tea party wore it - so why not go over the cliff as Howard Dean and other dems have been ESPOUSING ALL YEAR -- if the republicans are going to wear it.

Since 2007, four of the 12 months with the lowest trading volume have taken place this year. August was the third lowest monthly total, while July, October and November were also low by historic standards.

Pivots: http://t.co/scIw2lvf  and  Webcast: Post jobs data http://t.co/Ijgxvs1  Posted premarket by Mike V aka @princetontrader  Mike V also posted his vol windows at (08:50:27): ES: 1423.50 x 1410.75 and NQ: 2678.00 x 2646.50
MrTS premarket charts: “T” charts 30m http://screencast.com/t/Hre9soH8XZ
240m http://screencast.com/t/e54OkRLU  posted by Andy.
6E breached the bullish Bat PRZ (potential reversal zone) to test H&S 100% target: http://screencast.com/t/fgA81lmU posted by Kathy.
The Santa Scenario on the NQ 60min chart: http://www.screencast.com/users/springheel_jack/folders/1212/media/7c06fa32-6f08-4824-b55b-0a534a31883b  Posted by RichC/Jack

Today’s S&P futures (spoos) started with 365k ESZ and 1.5k SPZ traded on Globex, trading range 1422.00 – 1408.60 / Thursday’s regular trading hours (RTH’s), pit session trading range was 1413.30 – 1405.00, settled at 1413.00 up 4.7 handles. The weekly highs were made last Monday when the Globex session traded 1424.00 and Monday’s RTH’s topped out at 1422.30.Today, the RTH’s gapped 4.5 handles higher to 1417.50 – 1418.50, traded up to 1419.80, shy of the Globex high, before fading back to the opening range in front of  the University of Michigan consumer confidence report at 8:55CT. The report was was a big disappointment, 74.5 versus expectations 82.4 and spiked the spoos lower to test the previous close at 1413.00 before retesting and failing at the opening range by 9:15 on the bounce. These lower highs during the RTH’s session were a sign of some profit taking, selling into the news. Following some sideways to lower trade, the spoos traded 1410.00 by 10:01.

Apple [AAPL] traded down to new lows going into the noon hour, but the indices shrugged off the AAPL weakness and slowly climbed higher through the early afternoon. Once again, traders left early and closed out the week during the lunch hour or before. By 1:35 the spoos were trading 1416.50 area, a bit shy of the opening range, and traded sideways to lower, holding above the 1413.50 area. At 2:30 the indices caught a small bid, but once again held at the opening range. At 2:45 the closing imbalance showed 21 of the Dow 30 to buy and the broader market showed a moderate $495M to the buy side. On the 3:00 cash close the spoos traded 1417.00 area before settling at 1416.00 on the 3:15 futures close, up 3 handles on the day. Last week settled at 1414.40.

Brian Shepard is a 20-year exchange member of the CME Group.
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CONTRIBUTORS’ CORNER

SPX CHARTS

Roger Volz, BGC Partners

SP 500 60 Min Chart and Indicator....reverted to positive leaning on yesterday’s retake of the 89-pd SMA at 1408.00 (noting held last test prior to NFP rip); breakout pattern above 1415.00 raises the trading range in this time frame with overhead resistance concentrations at 1422.00 (Bollinger) to 1424.00 (Dec 3 high 1423.90); then followed by 1427.00-1431.50. EU session in globex saw early selling against 1412.50 (which should cushion any early dip)
ST OB > 1431.50 from 1427.00 // ST OS

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