Employment Report is Bad

The Naz pre-market futures were up around +25.00 before the Jobs Report came in worse than expected. Since then those futures have faded back to about +10.00. Traders are also digesting a few earnings misses from QCOM, DIS, and S. However, the employment situation will be on the front-burner this morning with the Unemployment Rate hitting 6.5% vs. 6.3% expected and Non-farm Payrolls hitting -240k vs. -200k expected. The numbers just aren't good. They were mostly expected, but the miss will probably take away any chance for a strong bullish bounce back today.

Here is a chart of the Dow:
(click on image to enlarge)

I speculate that any wiggle this morning is likely to top out in the 8,850 - 8,900 area if we get it. A move above 9,000 and all bets are off for any puts. What looks like a likely scenario is a settling out process in the mid 8,000's during much of the day. If we go through yesterday's low then I expect a move to 8,500, and if we go through 8,500 then I expect a move towards 8,200. However, we will be more prone to headfakes today than we were the past two days. The market is pretty oversold on the Very Short Term and may bounce around intra-day. Wednesday and Thursday were very nice for puts, today you need to keep on eye on things a little tighter. If we get a higher high on the 15m charts (a move above 8,850 - 9000) then it may be awhile before the market rolls over - if it does at all. If we get a higher high on the 60m charts then all bets are off on puts for the day. So either a move above 9,000 or a higher high on the 60m charts and I'm not looking at puts.

The market looks like it's headed for a small gap up and a bullish wiggle in the morning. I speculate that the Bears will fade that move early on, which may be a put opportunity. But keep an eye on the 8,650 area and how traders are treating it. If the market weakens up and fades away through that area then it's likely headed towards 8,500 and the downswing continues for a little while longer. I'm looking for an immediate move towards 8,850 - 8,900 right out of the gate and then a fade and testing process between 8,850 and 8,650 before the market decides what to do next.

As always, we shall see.....

7:31 am MT: I just watched the open and we did indeed get the immediate move towards 8,850 right out of the gate.

7:40 am MT: Here is our first fade after the test of 8,850 just as I speculated. So it's game on for the market.....This is the early day process of battling between 8,650 - 8,850 that I was writing about. Watch to see which way the market goes with these battle points. If the market pops through 8,850 - 8,900 then it may be bullish intra-day for a few hours. But for now, we are in the battle zone.

I still think we will see the market in a settling out process, so I am watching for a potential drop through the 8,650, perhaps later today, followed by more attempts from the Bulls to test the intermediate term bottom and push the market back up.

12:15 pm MT: We are at a key tipping point intra-day. Either the Dow punches through the low 8,900 area and makes a run to 9,000 and the likelihood of finishing in the red on the day is miniscule, or it rolls over and takes another shot at 8,650.

Whatever happens next, the early and mid-day was just as I speculated, a settling down process. The Battle Zone held all through the morning and the trading range has continued to tighten. If we have a strong move into the close (up or down), it will probably happen in the last 90 minutes. The probabilities favor the move to the downside by about 60/40, but with this being a range contraction day and the weekend coming up, I won't be surprised if the market moves are muted compared to the last couple of days. The price activity getting tighter all morning was exactly why I said that puts would be tougher earlier in the day. We'll see how the day closes out.....