Hot Jobs....Improving Services.... Stock Market Pulling Back 2052 To 2134 The Range....

By: Jack_Steiman

A lot of anticipation was out there ahead of the big Jobs Report out this morning before trading began. Expectations of approximately 180,000 jobs created was the name of the game, but there were other numbers out there as well. A range of 150K to 240K. The report pulled a shocker. 271K jobs created. Even better than even the highest predictions of optimism. The futures fell very hard on the news as it would now be a lock for the Fed to raise rates by a whole .25 BP come their December meeting. Of course, you can understand my sarcasm.

The market was looking for a reason to pull back as it was generally overbought on the key, daily index charts, so any type of news would likely be frowned upon. You know, deep down the market wants a raise, so the news was actually good, but the spin doctor's came in and said they're worried about hikes, so down we went.

The market simply trying to purge its way lower to unwind those overbought daily oscillators. 70 RSI gets boring after a while, thus, the market fell. If the RSI's had been 50, or lower, then my guess is today would have been a strong day to the up side. Disneyland wanted to unwind, so we did a little bit of that. We didn't do it out of fear of higher interest rates. The market knows there won't be any rate-hike cycle in the near to likely distant future. Simple unwinding the reality in a game where there really isn't any. So the market seized on the opportunity to sell some, and, thus, it did just that and it was a healthy bit of unwinding. Nothing terrible. Just enough to get a those oscillators unwound some. Nothing from nothing big picture.

The week was filled with three key reports. The ISM Manufacturing Report along with the ISM Services Report, and the Jobs Report figures. Many are arguing that we're transitioning from a manufacturing nation to one of more services. There can be a valid argument made on that front. When the manufacturing number came out at 50.1, or just a hair above recession, the market yawned. It seemed more focused on the services number, and happily for the bulls that number did not disappoint. It came just shy of 60, with expectation at 57. Services jumping nicely, with the bulls celebrating no plunge in that area of the economy. The jobs number was also solid. Two out of three, and I gather the two most important were solid. That's good for the real economy here at home. Let's hope this is a trend that continues, so the Fed can raise without hesitation. Also because it's a good sign for the average person in this country in terms of new opportunities. A good week overall on the economic front.

The market is setting itself up for only two numbers that truly matter bigger picture. There's a confluence of support around 2060, but since 2052 is the bottom of the gap up, let's use 2052 as the bottom number of important and critical support. On the upside, we know the old high at 2134 is what counts. So we're basically now trading in a rather large range of 82 points. 4%. Wide and loose. When you're in a rather large trading range, the best way to play is when things have unwound first on the sixty-minute chart and then on the daily chart, at least a little bit as well. Find stocks that had good earnings and has unwound, and you'll cut down your risk, and likely have better results overall. No guarantees with anything, of course, but in this type of environment you want to do your best to have the best risk reward set-up before you purchase anything, long or short.

Since the trend is still up the best way to focus is on longs but go short if you like. Again, do your best to make sure your risk reward is as good as it can be. At least you'll raise your odds of success. Nothing is easy in this game as you all know by now. For now, that will be my way of going about things. Be appropriate.

Peace,

Jack

Jack Steiman is author of SwingTradeOnline.com ( www.swingtradeonline.com ). Former columnist for TheStreet.com, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

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