MomentumOptionsTrading.com Morning Update for 7/5/2013

 

Wall Street Braces for Nonfarm Payrolls Report 

8:00am (EST)

 

The back-and-forth action between the bulls and bears continued on Wednesday’s half session with the market moving higher and showing slight gains for the week.

The Dow advanced 56 points, or 0.4%, to settle at 14,988.  The blue-chips traded up to 15,025 after testing a low of 14,858 after the open.  The next 200 points and a break above 15,200 or drop below 14,800 could set the next trend.

The S&P 500 added a point, or o.1%, to close at 1,615.  The index traded up to 1,618 after testing 1,604 on Wednesday.  A close above 1,625 today would be bullish heading into next week while a finish under 1,600 wwould be bearish.

The Nasdaq jumped 10 points, or 0.3%, to end at 3,443.  Tech held 3,400 on the opening dip to 3,417 and rebounded to 3,455 an hour before the close.  Resistance at 3,450 held and a close above this level could get 3,500 in play with 2Q earnings starting next week.  A drop below 3,425-3,400 would set a bearish vibe.

The Russell 2000 gained nearly 2 points, or 0.2%, to finish at 991.  The smalled-caps kissed 993 after testing 984 at the start of trading and the close above 990 was bullish.  A 1% push higher gets 1,000 in play but a close above this level hasn’t happened all year.  When and if it does there could be a quick run to 1,025.  The bears are looking to get the action back between 980-975 before the weekend.

The S&P 500 Volatility Index ($VIX, 16.20, down 0.24) reached a peak of 17.32 and held 17.50 while ending at its low for the session.  The next 1% move from here will favor the bulls on a break below 15, or the bears on a close above 17.50.

The magic number for the Nonfarm Payrolls report this morning is 165,000.  This would be a decrease of 10,000 jobs added from May’s print of 175,000.  If jobs come in below expectations it could end some of the taper talk as the Fed said it wants to see 200,000 jobs added a month before they cut back QE (quantative easing).  If the report comes in above expectations and May’s numbers, expect more “taper talk”.

 

Volatility could be extreme at the open despite low volume but once the fireworks are over, it could be a flat day.