Overnight there were mixed markets around the world as Europe continues to get a little stronger while Japan still is trying to work off excess and China lags at five-month lows.
S&P futures were up 5-6 handles going into the jobs report, and despite some dismal data they remain higher perhaps on hopes that the Fed’s exit from QE will not be so hasty. The US economy added 74,000 jobs in December, well below expectations of nearly 200,000, while the unemployment rate dropped 0.3% due to more people leaving the workforce.
I was hoping that we could get some good news that would be good news for the market and we could get out of this cycle of analyzing data as it pertains to the Fed and QE. Today, though, I’m sure we will be getting analysis from everyone on how this data point affects the Fed’s exit plan – and on whether QE really does anything besides inflate asset prices in the first place. The dollar sold off sharply while Gold is up more than 1% pre-market after the news.
After nine sessions and all the analysis, I do think the markets did a good job consolidating a strong 4th quarter run on top of an epic 2013. The S&P built a nice floor above the prior breakout of 1823ish and now looks poised to potentially take out 1848ish, the 2013 highs. This would be a spot where most will have to make adjustments – stubborn shorts will have to choose whether to ride them up, and complacent longs might have to put money to work to not be left behind like they maybe were last year. If we do break above that level it should be interesting.
Have a plan. So far it’s been a bit thin with some air pockets intraday, but a lot of nice individual action for any timeframe..
Disclosure: Scott Redler is long GE, SNE, BAC. Short BBRY.