Stock futures are rallying this morning after a blockbuster jobs report. The US economy added 146,000 non-farm payrolls in November, well above expectations of around 80,000, while the unemployment rate fell to 7.7%, the lowest rate since December 2008. Economists had anticipated a potential disruption in hiring due to Hurricane Sandy, but the Superstorm appears to have had little effect.
With today's pre-market strength, the S&P looks set to open near Monday's pivot high. If the index can close above the 50-day MA today it would be constructive, and a close above Monday's high of 1423.73 could pave the way for another leg higher. The next resistance area after that would be around 1433-1434. Right now, the market is sending very mixed signals, and if we can't build on this pre-market rally it could be further proof of indecision.
The market has been able to absorb some erratic price action from leading stocks, particularly Apple (AAPL). AAPL is the largest component of the Nasdaq and affects sentiment for all of the indices, so its price action generally has a significant effect on the broader market. The stock was weak Monday and Tuesday, and then accelerated to the downside on Wednesday. Yesterday AAPL opened down and then traded lower off the open before reversing and bouncing hard to go positive on the day. The reversal will relieve some short-term pressure on the stock, but AAPL still has a lot to prove going forward. Could it be building the right shoulder of a macro head and shoulders pattern?
Traders like to look for relative strength while the market rests, and Amazon (AMZN) is certainly exhibiting that type of behavior. AMZN was quiet compared to some of its peers yesterday, which is healthy after this lengthy rally. I expect AMZN to be near highs by early 2013.
Netflix (NFLX) will likely be in focus today after news that CEO Reed Hastings was served with a Wells Notice in regards to a Facebook post. The SEC is looking into the post from early July that claimed Netflix users had watched more than 1 billion hours of streaming video in June, believing the statement could represent a breach of "selective disclosure" rules. The stock does not seem to be too bothered by the news. NFLX ignited higher on Tuesday following news of a media rights deal with Disney.
Continue to watch the banks as a potential harbinger for the market. Bank of America (BAC) had a strong breakout Wednesday and is showing pre-market strength on this jobs report. We had listed BAC repeatedly on the Price Point Sheet and Off the Charts newsletter, and patience was finally rewarded. With BAC opening near yesterday's high this morning, see if the stock gets more momentum.
The market seems to be indecisive right now, which is a time for traders to be more cautious. We prefer to wait for more clear-cut patterns to set-up before trading aggressively, and we will keep you updated on the Virtual Trading Floor when that happens. If you want to spend your Friday furthering your trading education, sign up for our Free Online Trading Course.
*DISCLOSURES: Marc Sperling is long BAC, AAPL, ZNGA, ZNGA calls, ANTH, S, RIMM, AOL calls, RIMM calls, MNST, JCP, GS calls, JCP calls, CMG, AOL, LNKD, GS, MLNX calls, CMG calls, AIG, C calls, UA, AAPL calls, BIDU calls, FB calls, MA, MLNX, JAZZ, FSLR calls, SHOS.