Before the Open (May 4)

Posted on by Jason Leavitt

Good morning. Happy Friday. Happy Employment Numbers Day.
The Asian/Pacific markets closed mixed; there were no 1% movers. Europe is currently mostly down. Belgium and Stockholm are down more than 1%. Futures here in the States (before the employment numbers were released) were flat.

The dollar is up slightly. Oil is down almost 2%; copper is flat. Gold and silver are down.
On Tuesday the bulls were feeling pretty good. The Dow was hitting a new high, and the other indexes weren’t far behind. The breadth indicators had improved, and several key groups and key stocks had recovered from recent losses. Overall the indexes were in a trading range, but given prices were much closer to the top of their ranges that the bottom, the bulls were breathing a little easier. Not any more. Prices have been falling for three days, and less-than-expected jobs report numbers could put the hammer down.
Here are the numbers…
unemployment rate: dropped to 8.1% (from 8.2%)
nonfarm payrolls: up 115K
private payrolls: up 130K
average workweek: 34.50 hours
hourly earnings: $23.38
The market’s initial reaction was to move down slightly, but a couple minutes after the release, there were no fireworks.
The bulls have their work cut out for them. Another day of selling would not be good. It wouldn’t be the end of the world, but it wouldn’t be indicative of strength. Bottom line is the market is in a funk. Rallies get sold, dips get bought. Over the last couple months the indexes have been range bound, and until they breakout of their funk, be defensive. More after the open.
headlines at Yahoo Finance
headlines at MarketWatch
today’s upgrades/downgrades
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (May 4)”

  1. Testing and showing support twice in the premarket at the bottom of the channel in the futures. Threatening again now. But, it looking weak this time.

    1. Brian – Just a few thoughts from an EW perspective. Breaking SPX 1375 intraday suggests we should at least get a test of 1357-59 for a possible “abc” flat and a completion of wave 4 of C, IMO. Near term, 1370 is potential support in that it would be a 1.618 extention of wave 1 down (1415 down to 1394) which is typical in a wave 3. So, I’m assumimng we’re in wave 3 down (which began from 1404ish) which could end around 1370. After a wave 4 retrace, we could see the test of 1357-59 to complete the “abc” flat correction for wave 4 of C. Longer term, that would be the best long entry area since wave 2 ended at 1202, from the bullish perspective. The bearish view would begin if/when we see a pattern of trading develop below 1357.

      1. I see your perspective. Wish I had some input, but your assessment is very reasonable. I believe we are now seeing the bottom of 3 of c of 4 of C. I’d expect about a 8 pt rally off the recent low to conclude the 4 of c of 4 of C.

          1. Brian – The action in SPX today leads me to believe the probabilities are increasing that we’ll see a test of 1357-59 (at least if this is going to be a “flat” abc) on MON. IF we’re seeing a “zig-zag” down, “c” = “a” at 1350ish. IMO, SPX seems to be trying to find an end to wave 3 around today’s low. If a corrective bounce higher gets to 1376ish +/-. I’d be tempted to add a short position and target 1357-59 as a minimum with the possibility of 1340-1350 being tested next week.

          2. I was with you until this prolonged sideways move. I think we get a new low today.

          3. If we do make a new low before the close, I may cover a short position and leave the other open. It’ll depend on the size of the drop. But, it appears we could stay sideways or get some profit taking into the close.

  2. May is shaping up to be a great month. Meaning the market has gone no where. Nothing is better than being range bound and selling credit spreads that expire worthless for the buyers and 100% profit for me.
    This is getting to the point I almost want to sell naked options.
    Bullish chinese solar stocks. The are low today. I bought some. I’ll trade out for a profit before May 17th if I can; however, May 17th is when you US department of commerce makes is ruling and anti-dumping. I expect this body to rule dumping was done; however, the tariffs imposed will be less than 5%. Chinese solar will break out then.

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