Jobs Report is So So

The July Jobs numbers gave the pre-market futures a little boost because Non-farm Payrolls came in at -51k versus the -75k expected. However, the Unemployment Rate rose to 5.7% versus the 5.6% expected, so the temporary bump in the futures might not translate to a bullish day in the market. We still have the July ISM Index report due out 30m after the open. So expect some volatility in the first hour.

Right now the market is set to wiggle out of the gate a little, maybe go a little green. If the ISM comes in better than expected then the market may finish in the green. If the ISM misses the consensus then the Dow and SPX may tumble down below yesterday's lows and then puts on the DIA and SPY and other stocks could be in order. But for now it looks like a mixed morning that could be a little volatile as traders slosh back and forth. It may be tough to get a read on the market for a little while, maybe until an hour or so after the ISM report unless the report is way outside the expected one way or the other.

8:05 am MT: The ISM Index came in at 50.0 versus the 49.2 expected, which is a pretty decent reading. However, the number doesn't appear to have beaten expectations strongly enough to overcome the technical move on the price charts, which is short term bearish from yesterday. My speculation is that the 5.7% on the Unemployment Rate has traders too nervous to buy heavily this morning. In addition, oil is up a little (not much though) on the day. For now I am nibbling on puts for DIA, SPY, and OI. If the Dow and SPX Flag back intra-day for an hour or so, I will nibble some more puts. The 11,400 - 11,440 area becomes new short term resistance on the Dow, and the 1,265 - 1,270 area is new short term resistance for the SPX. If we go past the top end of those zones I will look to stop the puts.

Use the 30m charts on the Dow and SPX to guide you for the next several hours as the Head and Shoulders has confirmed on that time frame, and has caught the attention of traders. We are probably due to bounce back for an hour or so right now, but if we do get a bounce and it rolls over below the neckline then that would be a put opportunity into the end of the day.

1:00 pm MT: The market it going tight and losing it's momentum. There really isn't anything to report, nothing has changed in several hours. I will probably sell the three put positions before the close.

1:56 pm MT: I sold all three put positions. I made .05 cents on the DIA and SPY trades and a whopping .04 cents on the OI trade. It was a toss of the coin for me as to whether or not I held the positions over the weekend because I think the market is probably going a little tighter and is unlikely to have a big gap one way or another Monday morning without some kind of dramatic move in oil prices. I finished the day with a profit of $128, so the final tally for the week is a profit of $5,119. I will look at all three puts again first thing Monday.

9:00 pm MT: Market Wrap: The major indexes closed the day pretty quietly. Earnings Season is winding down with the majority of company reports on the books. In addition, the biggest Economic Reports have been reported. The Fed meets on Tuesday to announce rate policy, but the meeting will probably be a non-event. That leaves oil as the key catalyst for next week if Benny keeps the electric guitar in the case.....

That's the way I'm playing it next week. I'm focused on oil, the short term price moves on the market, and trading short swings Monday and at the latest Tuesday morning. If the Fed is a non-event, as I anticipate, then the focus goes right back on oil. Unless we see a big move in oil prices one way or another, the market could go tight for a few days. I will trade with one eye on the market charts and one eye on the price of oil, and keep the swings short.

Here is a chart of the Dow showing the tightening I was writing about:
(click on image to enlarge)

I speculate that the Dow won't go significantly outside the Triangle unless we get a 3-5 dollar or more move in oil prices Monday or Tuesday or the Fed surprises us Tuesday afternoon. Otherwise, the biggest move down I would anticipate on Monday is a drop to 11,200, or maybe 11,150 if oil jumps 2-3 dollars a barrel. If the market moves up on a drop in oil prices I would expect 11,500 - 11,550 to be resistance. After the Fed the market may loosen up a bit and show a direction, but again, it will probably be strongly correlated to the price of oil.