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Navigating Jobs Friday


President of Blue Line Futures

Market Activity

– Nonfarm Payrolls due at 7:30 am CT. Expectations are for 450k jobs added, wage growth of +0.4% MoM and +4.9% YoY, Unemployment Rate to 4.7% from 4.8%.

– Headline job growth is crucial after two very disappointing reports; 560k jobs added in August and September combined, expectations were 1,250k.

– Strong ISM PMIs this week, led by Services sector. Employment component in Manufacturing expanded at 52, but Services 51.6, down from 53.0 in September. Do we see difficulty of adding jobs in the Services sector?

– Initial Jobless Claims improved for five straight weeks to a new pandemic low of 269k yesterday.

– Labor market is getting tighter, but Fed Chair Powell noted “still ground to cover”. He added “the inflation we are seeing is not due to a tight labor market”.

– Another miss on job growth likely would not derail this rally. If anything, it pushes back expectations for a rate hike. Now a 61.2% probability of a hike by June. Although the unlikely event of a loss of jobs would bring shock.

– Wild card would be wage growth really surging with job growth missing; signs of stagflation.

– House to vote on President Biden’s spending bill as well as infrastructure that was passed by Senate.

– Covid cases are rising in Europe. Germany added 37k cases yesterday and 7-day moving average above April highs. Curve in U.K. flattening. China cases rise to 800. Coincidence that Crude Oil and Copper have struggled this week?

– China growth fears due to draconian measures to battle new rise in Covid cases and uncertainties tied to ongoing Evergrande saga are in the background.

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E-mini S&P (December) / NQ (December)

S&P, yesterday’s close: Settled at 4673.25, up 21.00

NQ, yesterday’s close: Settled at 16,330.75, up 201.00

– Market has embarked on its next leg higher, close above 4620 S&P to confirm.

– Melt higher sees no real resistance, chewed right through our next level at 4679.25-4682 in the S&P and 16,369 in NQ.

– As resistances matter less, it is now more about judging higher floors. For the S&P, new floor developing at … Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

Crude Oil (December)

Yesterday’s close: Settled at 78.81, down 2.05

– We have raised caution over the last week. What was rare major four-star resistance at 84.60-84.50 held, now major three-star. That volatility will pick up once 80.77-81.17 is decisively violated.

– Rise in Covid cases from Germany to China does bring an underlying demand fear.

– OPEC+ held a steady hand, adding 400,000 bpd in production as expected. Remained adamant supply glut is not out of the woods next year.

– Heavy selling yesterday helps rebalance a trade that was becoming exhausted and slightly over-crowded as Net-Long Managed Money grew.

– Still, many strong levels of major three-star support detailed below.

– Close back above … Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

Gold (December) / Silver (December)

Gold, yesterday’s close: Settled at 1793.5, up 29.6

Silver, yesterday’s close: Settled at 23.911, up 0.68

– Gold and Silver rallied yesterday in the face of U.S. Dollar strength. However, USD was result of dovish Bank of England and Pound -1.4%.

– Crude and Copper simply not trading higher could quietly underpin Gold as it offsets inflation fears and does not force Federal Reserve to speed up tightening

– At the end of the day, it was a dovish Fed per our description in S&P/NQ section of yesterday’s Morning Express that led to rally.

– Today will come down to Nonfarm Payroll, job and wage growth. Even if jobs miss, very strong wage growth would be a headwind to this rally.

– Massive technical level being tested in Gold from 1800-1815, must close above and still not out of the woods.

– Inverse head and shoulders in Silver.

– Must hold steady above … Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

Originally Posted on November 5, 2021 – Navigating Jobs Friday

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