The Most Important Day Of The Year For Stocks? Could Be…

Stocks are rising ahead of the employment report today and given the importance of this report. It seems that pre-market action will likely not matter much. The estimates are for 3 million jobs to have been created in June. That seems like a high hurdle, but what do I know. Last month was a major blow out. 

So there are a few things to watch for in this report, that could create some confusion. Remember, two different surveys come across on the headlines. The non-farm payroll is a separate survey from the unemployment rate survey. So we will be looking for any revision from last month up or down. Remember last month nearly 5 million workers were misclassified on the unemployment survey. So there is a very good chance for a revision downward.

Additionally, we will want to watch the initial jobless claims today as well, which also comes at 8:30.

So could we see a blow out job report, a lower unemployment rate, and higher continuing claims, and the market go lower? Yes. Could we see miss on the job report, higher unemployment, falling claims, and the market go higher? Yes. It will depend entirely on what the market views as the most important headline.

S&P 500 (SPY

Traders appear to be wasting no time, trying to jump ahead of the report with the SPY already trading higher by 70 bps. If this holds throughout the day, and we close above the downtrend at around $310, it would be a big win with the next level of resistance at $314. The $314 level may be a challenge; remember we failed there several times before moving down to $300. 

It has become increasingly confusing to determine what the driving force behind the market is these days. The latest news around the virus seems to be getting worse, and many states are tightening up their restriction, but yet markets have remained immune to this. I’m not sure if the market is merely ignoring the news, or if it is betting, it will get more stimulus to bridge the gap.  It seems like a significant game of risk. 

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Disclosure: Mott Capital Management, LLC is a registered investment adviser. Information ...

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