US Employers added 280,000 jobs in May, the most in five months, further dispelling fears that a first-quarter slowdown would take hold, figures from the US Labour Department showed Friday. That followed a revised 221,000 April advance.
For anybody following my new Platinum Service, the results for last week were, Monday +460 points, Tuesday + 40 points, Wednesday +310 points,Thursday a lucky + 20 points as I emailed all my Platinum Members to exit their S&P position at 2109. Friday saw a 125 point gain leading to an 955 point gain for the week.
Hourly earnings climbed from a year ago by the most since August 2013, while an increase in the number of people entering the labour force caused the unemployment rate to creep up to 5.5 percent from 5.4 percent. The report bolstered the case for Federal Reserve policy makers to begin raising rates this year.
“This only reinforces the view that the economy is a lot healthier than the GDP data imply,” said Joe LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, whose projection for a 275,000 gain was among the closest in the Bloomberg survey. “How weak can the economy be when we’re generating this kind of job growth?”
Broad-based employment gains from builders to trucking companies to local governments show hiring managers are confident the economy will regain its footing after faltering early this year. The dollar surged to a 13-year high versus the Japanese yen and Treasuries tumbled.
“A Fed rate hike later this year is still on,” said Thomas Costerg, senior economist at Standard Chartered Bank in New York. “The GDP data had been quite weak in Q1, and the Fed is looking for reasons to dismiss the report. Today’s payroll report to some degree puts the Q1 weakness behind us.”
The Bloomberg Dollar Spot Index added 0.8 percent, with the greenback rising to 125.64 yen at the close in New York. The yield on the 10-year Treasury note climbed to 2.40 percent from 2.31 percent late Thursday. The Standard & Poor’s 500 Index fell 0.1 percent at the close.
The world’s largest economy shrank at a 0.7 percent annualized rate in the first quarter, according to the Commerce Department’s latest report on gross domestic product.
“Although the job market has made considerable progress throughout this recovery, challenges remain for our economy,” Jason Furman, chairman of the White House Council of Economic Advisers, said in a statement. “The President is committed to building on the positive trends through a comprehensive agenda to boost employment and wages for the middle class.”
This morning on the economic front on the only data of note due from the UK and the Euro-Zone is German Industrial Production and Trade Balance which are due to be released at the earlier time of 7.00am. The only US data is CB Employment Trends and Fed Labour Market Conditions Index which both be released at 3.00 pm.
June S&P 500
Thankfully we decided to stay out of all markets on Friday until the Non-Farm Payrolls were released. As Most Members know at this stage the only two trading days per month where I stay flat until get the news is on Payroll’s day and a Fed Meeting with the next one due on June 16/17. Unfortunately following the Payrolls on Friday the S&P traded to a 2083.50 low which just missed my 2083 buy level before having a 12 handle rally and I am still flat. The S&P had a heavy close on Friday with the market finally closing below the 2095/2100 previous major support. Today I will be a small seller on any rally higher to 2097/2103 in small size with a 2107 stop. Given my concerns for this market I am going to drop my buy level to 2073/2078 with a 2066 stop.
EUR/USD
Following the release of the Non-Farm Payrolls on Friday the Euro just spiked 150 points lower and in the process went straight through my buy level and stop level and I am now flat. The 1.1015/1.1040 is good support for the Euro and I still believe that despite the extent of the rally on Thursday and subsequent sell-off on Friday that as long as the Euro can hold 1.10 that I still expect the market to trade higher to at least 1.1550/1.1600. Today I will be a small buyer from 1.1045/1.1075 with a 1.0990 stop. I still do not want to be short the Euro at this time.
June Dollar Index
Similar to the Euro above the Dollar just spiked over 1% higher on the Payrolls release and in the process went through both my buy and sell levels and I am still flat. Today I will still be a seller on any rally higher to 96.0/96.90with a 97.25 stop. The 96.70/97.10 should act as good resistance for the Dollar and for this reason I still do not want to be long the Dollar at this time.
June DAX
The DAX plan worked well on Friday as shortly after the Payrolls were released the DAX traded lower to my 11210 buy level before having a nice rally which enabled me to cover this position at 11270 and I am now flat. Today I will again be a small buyer on any dip lower to 11110/11150 with an 11070 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer in front of 11020 with a 10960 stop. Given how much the DAX has fallen over the past month and the fact that the market is trading at the bottom of its Bollinger Band and Williams Index I do not want to be short the DAX at this time.
June FTSE
The FTSE plan also worked well on Friday as shortly after I posted the FTSE was trading at my 6845 sell level before having a nice sell-off before the Payrolls were released which enabled me to cover this position at 6810 as indicated in my Platinum Service and I am now flat. Today I will again be a seller on any rally higher to 6840/6870 with a 6895 stop. With the FTSE having closed below the key 6850 pivot point for the second consecutive day I do not want to be long the market at this time.
Dow Rolling Contract
Just like the S&P above the Dow just missed my buy level by 18 points before going on to rally over 100 and I am still flat. As I mentioned last Friday the 11720/11770 is decent support for the Dow and a break and close below here could be significant. For this reason I will lower my buy level slightly to this 111720/11770 level with an 11670 stop. I will also lower my sell level to 11930/11980 with an 18020 stop.
September BUND
The BUND plan worked very well on Friday as the market got slammed on the Payrolls release which enabled me to buy the market at 150.20 before going on to a nice rally which enabled me to cover this position at 151.10 as indicated to my Platinum Members and I am now flat. Today I will again be a small buyer on any dip lower to 149.90/150.40 with a 149.30 stop. Given the exceptional volatility in the BUND market at this time I am trading in smaller size with a wider stop.
Gold Rolling Contract
I am glad that I stood aside from the Gold market on Friday which had another eventful move lower. The last line in the sand for Gold is the double bottom at 1141 over the past 12 months and a break and close below here could see an acceleration and possibly final down move from the 1900 high in 2011. Personally I do not believe we are going to take this low out. Today I will look to be a small buyer on any dip to 1152/1160 with a wider 1138 stop. If I am wrong and Gold does stop me out of any long position I will be a very aggressive buyer in front of 1120 with a wider 1090 stop.
Silver Rolling Contract
No Change as I am still a small buyer on any dip lower to 15.40/15.90 with the same 14.95 stop.
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