News Driver: (8:40am) North American markets set to open higher today with the release of positive jobs data. The ADP private sector added 205,000 jobs.
Oil is trading higher this morning +2.2% on the back of the API data released last night printing a better than expected number of a 3.837M build vs the forecast of 4.800M barrels. Better than expected as the number was less than forecast signalling a small drop in supply (small victories:)
S&P Futures down +0.4%
Nasdaq Futures down +0.2%
Dow Futures down +0.3%
Today’s action is a WEAK FORM RISK ON leaning to the strong side if the Nasdaq can start to out-perform. (higher risk assets being bought defensive assets under-perform or are being sold)
MID-LONG TERM (Weeks-To-3Months+): Bearish
(STILL IN FOCUS) Yesterday the S&P broke the 1928-1921 key level putting the short term move at a higher likelihood of failing. If the S&P 500 breaks back below 1,880-1,870 (a key support floor), and if the Crude Oil (WTI) reverses back below $30 aggressively. This market has more downside risks than upside potential in the mid-to-longer-term. Look to De-risk long positions with rallies unless you can stomach the volatility. We may very well look back at this time as the start of the Bear market. Be ready for anything.
SHORT TERM (Days-To-Weeks): Bullish
We enter the week with a HOLD on short term Swing and Positions trades. If the S&P 500 breaks 1928-1921 (support) a move closer to SELL for shorter term positions is a good idea. A break below 1880-1870 for the S&P 500 suggests the “bounce” is in jeopardy and likely over and a move to de-risk is the better option.
S&P 500: Up +0.5% implying an open close under resistance of 1,928-1,921. Re-gaining a foot hold above 1,928-1,921 would keep shorter-term positions on HOLD, a break above 1,950-1,940 moves us closer to BUY, persistent action below 1,928-1,921 moves us closer to SELL. There is some leadership from the Russell 2K into the open however the Nasdaq is lagging, adding to the weak-form risk-on tone in North America.
TSX: Likely to open challenging resistance of 12,547-12,497 a break above would help keep us closer to HOLD on mid-to-longer-term positions but no initiate BUYs for shorter-term positions
Bonds/Gold: Defensive assets are weakening pre-market (TLT -0.6, Gold flat), and volatility is mildly weakening (VXX -1.5%).
Oil: $30.75 (9:02AM):Breaking out back to $31.25 hourly resistance. $30 Is a key area of support to watch closely.
Economic Calendar: ADP Nonfarm Payrolls printed a beat at 8:15am. It was a higher than expected number of 205k versus the estimate of 195k. As I write this the market has responded favorably. The S&P Futures are approaching last weeks key level of 1907.
10am ISM Non-Manufacturing PMI (Jan) the forecast is 55.1 and at 10:30am the weekly Crude Oil inventories is released and will cause instant volatility in the Oil market.
For a review of the rest of today’s economic data visit the economic calendar here.
Earnings: Stocks to watch include GM $GM, GlaxoSmithKline $GSK, Merck $MRK, MetLife $MET and Yum Brands $YUM
For a complete list of today’s earnings visit the earnings page on our site.
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