Many times, people use euphemisms or exclamations needlessly. “Today is the hottest day ever” or “That was the absolute worst show I’ve ever seen” or “My kids are the most awesome kids on the face of the planet” (well, that one is true in my case!). Well, I won’t go on record as saying today’s unemployment is the most important one reported, but it is a pretty big one. There are several key benchmarks that the market follows at the present time (such as the European debt crisis). One of the bulwarks, however, is the job market in the United States. For the economy to truly recover, the job market must recover with it in at least some fashion. Wednesday morning, after some very positive news regarding the state of the relatively poorly capitalized European banks as the group did not have to get quite as much emergency money from the ECB as was originally thought. However, the ADP June employment report released Wednesday morning showed only 13,000 jobs were added from May to June versus an expectation of 61,000. The rate of new jobs fell below the five-month job creation average as well as south of the 55,000 jobs created number last month. This indicates that the trend of private employment seems to be decelerating. The importance of this report is that ADP is a private company versus the Federal government jobs report we will see this morning. Thus, barring a total surprise, realize that whatever number we see today may well be factored in to the mix but this is certainly one jobs number to monitor.
Markets in Asia were mixed overnight with Tokyo up 0.1% but Hong Kong down 1.1%. Prices are rebounding at this early writing in Europe with London up 0.8% and Frankfurt ahead 0.4% in a bit of a snapback from yesterday’s deep declines as Wall Street bounced while European markets were closed. After the breathtaking moves of the last few days, everything is quiet right now ahead of the jobs report with bonds, commodities, and the currencies little changed. The jobs report is the clear catalyst today. If the number comes in good, look for a huge bounce and a quiet session overall with much of the action taking place between 8:30AM ET to 10:15AM ET. If neutral, expect a mild sell-off followed by a decent rally. If bad, there’s going to be a sell-off…but I still don’t think it holds after stocks failed to decline yesterday despite mammoth moves in things like currencies. Regardless, trading will be much thinner and likely more quiet overall ahead of the long weekend. Focus on big caps- particularly financials and techs with relative strength and weakness depending on the tone of the market. Glance also at drillers and overseas miners off of the Australian tax compromise. Get ostensibly all of your trading done before noon as people are exhausted and will be off to the beach.
Reiterating-
If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified.
If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-
Good- The following stocks have good news and/or a strong technical pattern
AMED- closed near a high in a near island reversal despite receiving a formal SEC inquiry
BJ- closed near a high on takeover speculation
V- closed near a high
RIG- closed near a high
IDT- closed near a high
FSLR- closed near a high
NE- closed near a high
Bad-The following stocks have bad news and/or a weak technical pattern
WIBC- suspended its dividend and warned on its earnings outlook
HITK- received FDA warning letter over certain products
REGN- closed near a low
HRBN- closed near a low
LHCG- closed near a low on AMED’s probe
IBCA- closed near a low after filing to offer stock and noted it expects federal regulators to pursue a formal agreement with its banking subsidiary
SSCC- closed near a low as it re-debuted as an IPO after emerging from bankruptcy
Earnings:
None today
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner
www.epiphanytrading.com
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