Light Jobs Report Should Attract Buyers – Earnings Season Kicks-off Tuesday

Posted 9:30 AM ET - Last Friday we learned that only 156,000 jobs were created in September. That number was a little light and it should take some pressure off of the Fed in December. I expected to see a small rally Friday and we are getting it this morning. The S&P 500 is up 11 points pre-open. Wednesday the FOMC minutes will be released. The rhetoric was fairly hawkish and we know that officials are divided. This report should shed some light on how determined they are to hike this year. Earnings season will kick off Tuesday, but the major releases won't start for another week. I was hoping for a strong number Friday and a hard sell-off on the news. That might've given us an opportunity to challenge the 200-day moving average and a pullback of that magnitude would have provided an excellent opportunity to get long into year-end. In the absence of a decline, the market will muddle around through year-end. The threat of a rate hike in December will keep a lid on the market. We could test SPY $220 if earnings are good and that move will unfold in the next few weeks. As we get closer to the December FOMC, a round of profit-taking will push us to the low-end of the range. We have been trading from the long side in my chat room. This strategy has been very successful for us, but we need to be very patient when the market gaps higher on the open. All boats rise with the tide and there are many fakes that look great early in the day. We need to let the market settle down so that we can gauge its strength. This morning I will be very passive in the first hour of trading. If we get a market pullback relative strength will be easy to identify. The "fakes" will give up gains easily and the strongest stocks will compress near their higher the day. When the market finds support, I will be buying these stocks. If the market pushes higher and stalls, I will wait for compressions and pullbacks for stocks that have relative strength. In this scenario my entry has to be excellent and I need to set passive targets. The market has a tendency to make an opening move and then stall. Banks are closed for Columbus Day and Japan's market is also closed. This should be a fairly quiet day after the first couple of hours of trading. Be patient and trade from the long side today. Use the first hour range as your guide. Resistance is at SPY $217. . .

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