Soft ADP Report Sparks Relief Rally – Friday’s Jobs Number Could Be “Hot”

Posted 9:30 AM ET - Yesterday we hit some air pockets. The market made sharp moves in both directions. As the day wore on the selling pressure started to build. I believe we will see more profit-taking this week. ADP showed that 154,000 new jobs were created during the month of September in the private sector. This was about 15,000 jobs light and the market likes the news. The number was good enough to suggest slow growth and weak enough to possibly postpone a December rate hike. Initial jobless claims have been declining the last four weeks and I believe this could bode well for Friday's number. If we get anything above 200,000, the market will drop to the 100-day moving average. We are in "wait-and-see mode". The market has no pace and there is no follow-through. We are simply biding our time until the next news event hoping that it might give us some sense of direction. Seasonal weakness will end in two weeks. We need to see a sharp decline to get things cooking. Ideally we will test the 200-day moving average. Without this move we will simply muddle around in the range the rest of the year. I have been focusing on the long side and doing well with my day trades. Today will be a little more difficult since the market is opening higher. You have to be very patient in the early going and you have to wait for relative strength to reveal itself. If you jumped on the early rally yesterday, you lost money. Stocks reversed quickly and the market had a negative bias most of the day. I want to make sure that this rally holds this morning. If we are grinding higher and the momentum is decent I will start trading from the long side after an hour. If the market feels tenuous (likely), I will wait for a pullback and then it will be easy to spot relative strength. Once support is established I will get long. Traders will be nervous ahead of Friday's Unemployment Report. They know a strong number would lock-in a rate hike in December and they know a rate hike spark profit-taking. Be patient this morning and focus on the long side. Support is close by at SPY $213. . .

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