Countdown to the Employment Report…

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It’ll be interesting to see if this week *finally* brings the big headline number that everyone and their dog has been calling for for at least the past few months. Of course that big day has long since been discounted into the market, and in fact we’re already on to discounting things like…


…the presidential election, the coming increase in the Fed Funds rate, and various other joys in the pipeline, such as the ending of easy year-over-year earnings comparisons and other assorted peaks in second-derivative indicators, not to mention concerns over our twin deficits (budget and current account), the bond market, including mortgages, asset prices, and the dollar. Anyway, you can see what happened last month on Employment Report Friday (March 5th), when the consensus estimate was 120,000, the whisper number was north of 150,000, and the actual number was 21,000. I circled the price and volume on the chart. You can see last month’s report kicked off the latest (third) leg down and was the last time the QQQ saw its 20-day EMA until Friday (March 26), when it ran above the moving average only to have the door slammed in its face, leading to a close at the day’s low and also making an Inverted Hammer-looking candle, similar to the one made on March 5th. We still have to see if the market fails or follows through on the rally attempt it started on Thursday. And of course we need to see the employment news on Friday, and more importantly, the reaction to the news. In this weekend’s reading I found many people saying we had a downside capitulation this Monday, Tuesday and Wednesday, but my intuition says that “capitulation” is suspect. We will see. One interesting and potentially positive development you can see at the bottom of the chart is where I circled the MACD crossing to the upside. Another positive not show is the 200-day moving average, which seems to have provided some nice support. Still, for me, I’m pretty much on the sidelines at this juncture. This is not a time to be a hero!