Just like the Nikkei, we're going to be glad it's been a short week.
I think the Nasdaq is hovering in very dangerous territory at 2,600. We talked about indices that have already formed a death cross on Monday but there's no reason not to call them early when you see them and the 50 dma is making an ugly move over at the Nassdaq. Not to go all stock market 101 on you but keep in mind that every day the index spends below the 50 dma PULLS the 50 dma lower and time spent below the 200 dma is especially painful as that is what can cause a death cross, where the 50 dma dips below the 200 dma, giving us a huge downtrend.
There are few earnings of note from the technical side of the Nasdaq next week and the week of the 14th will be dominated by banks and financials. With options expiration on the 18th, there is a tremendous burden on AAPL not to disappoint us coming into MacWorld that week as the fate of the Nasdaq literally hangs on their shoulders (OK, perhaps INTC will matter just a bit too). GOOG is likely to be an also-ran unless they do something dramatic and, unfortunately, their chart does not look very encouraging if they break below $680 – although we've been betting they hold it as we went naked on our calls yesterday.
Of course we're covering everything into the weekend as it's a big, scary world out there but there's no reason we can't take a few reasonable chances as long as we hang onto our levels, even if it is only by a thread. I summed up the day yesterday at 9:40 am, saying to members: "Here’s our 80-point bounce off 13,000, now the obvious barrier at 13,100 then 13,160 makes a positive signal but it’s S&P 1,460 that will be key. Russell should be doing way better than 750 as the ADP data showed lots of small-cap job growth so that’s bothering me right now plus, we still have $100 oil to contend with."
We couldn't stay over our 13,080 line and 13,100 proved a tough barrier intraday but we gambled on a good Non-Farm Payroll reprot to push us over the hump today. We must, must, must break and hold 13,160 today or covering will not be enough to save us next week and we may have to initiate some mattress plays if we look to be failing there. With the Q's in such a precarious position and no good tech news scheduled for next week, I'm liking some QID calls as protectors mixed in with our usual DIA puts. Let's consider $50 to be a line in the sand on the Qs and we will watch them very carefully for direction.
Let's be very clear that my "bullish" position is simply playing for the return to the top of my 13,000-13,300 range, probably another test of 13,400 ahead of the financial earnings but, failing that, we are going to be shorting the hell out of things. For now, we're just picking up some cheap positions that would be good for a pop if I'm being overly pessimistic.
8:30: Oops, looks like pessimism was right on target as the Payroll data came in with just 18,000 jobs, far far below the 79,000 jobs expected and miles below the 115,000 jobs added last month. The pre-market dove 100-points seconds after the news and there were huge overreactions all around so this will be a nice test of some (hopefully) bottoms today. Let's not forget that no jobs means the Fed has a reason to cut and that the payroll data is notoriously inaccurate and very much in conflict with ADP's report earlier in the week so more APPL please on the morning dip – GOOG I'm not so sure of but $677.50 has been a fairly reliable bottom so I'll play them from there back to $685, probably by buying the $690s at the open.
We talked about Asia last night and Europe WAS up about half a point despite a nasty inflation outlook over there. Oil is a big concern there as well. As of 9 am, the European indices took a sharp turn down along with out futures.
Ordinarily I would consider this a buying opportunity but, as I said last night, the two candidates selected in Iowa were decidedly Wall Street unfriendly. We'll have to play it by ear so stay tuned in comments and we'll figure out the best plays to make.
Bush is speaking later as is one of the Fed Governors (I can't find which) and we have ISM service numbers at 10. Service jobs were the bright spot on the payroll report (as were rising wages if you are a worker) so it is possible we get a better than expected (53.5) result which will hopefully give us a bottom of some sort. Disappointment there would be fairly devastating.
Try to have a good day…
