What Miss?

End of Day Update:

Does the lousy Employment Report matter? Not if you go by Monday’s bullish response. Many traders were lucky the market was closed for Good Friday or else they would have mistakenly dumped the big miss in jobs.

While pundits are spinning their “good is bad” doublespeak, the simple truth is we ran out of sellers. Recent weakness put a damper on enthusiasm and many owners bailed before the jobs report. When the selling occurs ahead of time, there isn’t much weakness left for when the disappointing news finally breaks. Given today’s strong move, this was a classic sell the rumor, buy the news trade.

Many people complain the market is rigged, but they make the mistake of trading headlines. Those with a little more experience know only supply and demand drives prices. As I discussed in last week’s blog posts, we knew sentiment shifted heavily toward bears and prices slipped to the lower end of the 2,040-2,120 range. Even with a demoralizing miss in employment, there wasn’t a lot of downside left. That made buying ahead of employment an attractive risk/reward.

Over the near-term expect a short-squeeze to push us up to 2,100, but it doesn’t feel like this market has the momentum to finally break through 2,120 resistance. That means we are better served taking profits, not adding positions as we approach new highs.

Jani