A Strong Jobs Number Friday – Bad For the Market – Good For Traders

Posted 9:00 AM ET - After the initial rally Wednesday, the market fell into a tight trading range the rest of the day. We are up one day and down the next. The holding pattern is likely to continue today as we wait for the jobs number. ADP came in a little light at 154K. The market liked the news and a soft jobs report is priced in. Initial jobless claims have been decreasing the last 4 weeks and I believe we will be above 180K. The market would not like that because it will lock in a December rate hike. If this scenario plays out we could test the 100-day MA at the $213 level on SPY. We need a nice round of selling to shake things up a bit. Credit concerns are slightly elevated and we might see a quick probe to the $206 level. That is the 200-day MA and if we get there it will be a great buying opportunity. If the jobs number comes in under 150K we might see a little rally. Any move to the upside will be contained. The threat of a rate hike this year will keep a lid on the action and we will see profit taking if we get close to the all-time high. Look for a quiet trading day after the first hour. I love down opens. The trade quality has been better on the long side and I will be able to spot relative strength easily. Look for strong stocks and wait for market support. There is small support at $215 and $214. Strong support at $213 and this level will not be tested today. Resistance is at $217 and that should also be safe today. If the first hour range is preserved, set passive targets and keep your trade count low. If the first hour range is breached, use that breakout/breakdown and trade in that direction the rest of the day. I plan to only trade the open today. Things will quiet down ahead of the jobs report. . .

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