Friday October 8, 2010 - 21:41:30 GMT
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Forex Hound - www.forexhound.com
U.S. Equities Bounce Back after Jobs Report Triggers Sell-off
U.S. Equity markets are trading slightly
better after digging out of an early session low, triggered by a weaker than
expected September Non-Farm Payrolls Report.
Non-Farm Payrolls were down 95,000 while
the jobless rate remained unchanged at 9.6%. The government lost 159,000 jobs.
This number was split between Fed census workers and state workers. The private
sector gained 64,000 jobs which was right in line with expectations. The bottom
line is the jobs market is not keeping pace with growth in the economy.
Stock traders reacted initially to the
headline number by pressuring the December E-mini S&P 500 into the 50%
weekly support level. Based on the weekly range of 1127.00 to 1163.75, the key
retracement zone was 1145.50 to 1141.00.
After digesting the employment data and
realizing itâ€™s not about jobs at this time rather how much money the Fed is
going to pump into the economy, traders bought the break like they have been
accustomed to do these past few weeks. The subsequent rally brought the market
close to driving through the high for the week at 1163.75. The market is
churning at the mid-session, but there is plenty of time left to take another
shot at this high.
Technically, Thursday the market formed a
closing price reversal top. This pattern was confirmed this morning, but the
lack of follow-through to the downside seems to be indicating that this pattern
may fail. A trade through 1163.75 negates the pattern.
Aggressive traders may continue to try to
short this market as close to the high as possible. If it does work out and the
market begins a sell-off, there is the potential for a substantial correction.
The break will be labored however. First the market has to get through 1141.00
then the swing bottom at 1127.00. The trend will change to down on a move
through this level.
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