This morning, the long-awaited Unemployment Report was released. The Labor Department reported that employers cut 216,000 jobs in August, the smallest in over a year. Economists had expected 225,000 job losses and the number came in better-than-expected. The unemployment statistics for June and July collectively improved by 49,000 jobs and that is a positive. We are still losing jobs albeit at a slower rate and the unemployment rate hit 9.7% (a 26-year high).
Even though the number was good, the market reaction has been muted. It came in pretty much as expected and traders are hitting the exits to get a jump on the holiday weekend. Trading activity will fall off dramatically the rest of the day and Tuesday should also be a quiet.
Earlier in the week we had a dramatic selloff and I believe that was nervousness ahead of today’s number. The market has been able to find support before it tested SPY 98 and that is a bullish sign.
The economic releases have been decent. Durable goods orders, GDP, ISM manufacturing, ISM services and the Unemployment Report have all exceeded expectations. The Fed is committed to keeping interest rates low and Ben Bernanke will remain at the helm. Bond auctions have gone well and interest rates remain low. I don’t see any reason for this week’s decline to gain any traction next week.
Earnings will have easy comps from last year and we should see nice profit growth. Intel raised guidance last week and that should bode well for semi conductors and tech in general.
The economic releases are minimal next week in the market is likely to be very quiet. I am maintaining my bullish bias and I might look for new put credit spreads to write if conditions stabilize at this level. For now, I am content with my risk exposure.
Expect a quiet day with a positive bias. The news has been good and the decline from Tuesday was overblown. The path of least resistance is still up and I’m not looking for a big gain, but we should see prices move higher into the weekend.
Have a safe and happy holiday.