I wish everyone a safe and enjoyable holiday weekend!
The employment report boosted futures back to the point of resistance we discussed yesterday — the white channel top. Stocks still face the decision of whether to reverse or break out.
We often reach these points on the eve of holiday weekends, when volume is particularly low and TPTB can push it wherever they like. I can’t remember the last time the “market” didn’t break out. But, we should always be alert to the possibility that a big player will take advantage of the low volume/volatility to launch a bearish sneak attack a la this past New Year’s.
It’s not likely though. SPX gains on the days following all CME equity holidays in 2013 totaled 80 points, or about 5.6%.
In addition to the white channel top, there is potential Fib resistance at both the purple 1.618 as well as the red 1.272 or 1.618. Note the floor under prices this past week.
Quick note on the payroll report itself…Not to throw a wet blanket on the report, but the total jobs increase of 288K includes almost 800K part-time jobs — the most since 2003. Full-time jobs declined by 523K. Real wages declined for the third month in a row. Combined with the growing inflation we’re seeing, the stagflation argument is picking up steam.