Friday, May 7, 2004
Issue Contents:
| 09:13 | Jobs Report Initial Reaction. |
| 09:35 | Market Overview US and Canadian Premarket Review. |
| 15:13 | Focus on Broad Market Indexes Dow Industrials, S&P 500, NASDAQ 100 |
| 15:18 | TrendVue Trader Talk Reminder |
| 15:25 | Un-Real Estate Going to Extremes |
| 16:16 | TrendVue Active Trader Today's transcript. |
| 16:16 | TrendVue Trader Talk Today's transcript. |
A strong US jobs report is making waves around the world this morning:
Bloomberg: U.S. companies added 288,000 workers to payrolls in April and the unemployment rate fell to 5.6 percent. Economists had expected payrolls would rise by 170,000, according to a Bloomberg News survey. Jobs were added in manufacturing, construction and temporary help services.
The increase follows a revised gain of 337,000 jobs in March that was larger than estimated last month, the Labor Department reported in Washington. Manufacturers added jobs for a third straight month.
Bonds reacted quickly. The last bar on this weekly chart was largely drawn in the first 5 minutes after the report was released. Higher rates ahead, its clear from the reaction in the bond community that they believe rates are going up faster than the Fed's measured announcement might suggest.
The domino effect continues. Currencies react. EURUSD and USDJPY register strong moves and a strengthening USD.
USD gains over 1.4% against the JPY on the news:
This of course has the expected effect on certain commodities, notably Gold:
We identified the test of top in the Gold contract in early April and advised that it was time to leave the dreaded yellow metal alone. Since then Gold sector has been the worst performing sector in the market by a wide margin:
Moral of the story: when a test of top plays out in the big picture like this, assume that a top is in and trade accordingly. We can (and did in this case) attempt to start a long just under the test in the event that Gold pushed higher after a minor retracement. When that failed to materialize, it was our sign to exit stage left.
Learning where to sell is far more important than learning where to buy.
We will have more analysis as the day progresses. Equity indexes have sold off pre-market on the news - its going to be a little tricky this morning once stock traders get into the fray. Have a good day! /Mike
As noted in our column on the jobs report, equity futures are poised to open prices lower.
It remains to be seen if equity buyers will ultimately find cheer in the positive jobs number; clearly the bond market does not - fearing a rapid tightening cycle lies not far in the future.
US Markets: Price is set to open in the middle of Thursdays range so we are going to be watching a battle play out between buyers and sellers here. Should buyers manage to push price above Thursdays high, we will be looking to see if price can hold those levels and offer a long side trade. Of course, price may well push through yesterdays lows and open the potential for a complete re-test of the March 24 lows.
Canadian Indexes: We imagine the resource heavy TSX will be hit a little harder at the open, pushing price below support in some instances:
All eyes on Gold as selling is likely to continue.
/Mike
Yesterday, we updated the daily charts of the three broad market indexes. As of today, the [$INDU] and the [$SPX.X] hit the downside target.
What remains to be seen next week is if this will be the downside breakout or if the congestion area is simply going to get bigger. /Teresa
During the day, Mike and I make comments pertaining to the market in real time, and you may wish to quickly scan the transcript each day in case there are tidbits of useful information in it. /Teresa
A picture is worth a thousand words, like the piece that we showed you on April 3...
I bought this Canadian national magazine yesterday because the way the words on the cover are so typical of sentiment having gone to extremes.
Another reason is that I actually know the person who was the owner of this house, the son of a good friend. This kid is *30* years old, and he's known to be a very good stock trader. As they say, timing is everything. /Teresa
Today's transcript.
Click on the title above to expand this document.
Today's transcript.
Click on the title above to expand this document.