Keystone's Morning Wake-Up 10/5/12; Monthly Jobs Report

The SPX is up for the first four days of October. Typically, the first days of the month are buoyant, especially the start of the quarters (now in Q4), as new money comes into the markets.  Interestingly, when markets are up the first three days in a row, the next two days are down days.  This seasonality factor is already violated but perhaps it will rhyme instead and project down markets from now into early next week.  This past Monday was up which is against the trend of down Monday's for the last three months. This is of interest since down Monday's signal a disinterest in the stock market and typically lead to extended bearishness. As yet, this has not happened, the broad indexes remain elevated near the highs for the year.

The Jobs Report is the main event today and it will immediately impact markets.  The estimates are all over the map from 100K to 160K with an average of about 115,000 expected and an umployment rate of 8.2%. Last month the rate had dropped from 8.3% to 8.1%.  Since the Fed announced QE3 and its support of the job situation, as well as the presidential election now only one month away, this jobs number is the most important economic data release of the entire year.  Both Romney and the President will find the positive spin and run to the microphones. The jobs report is only one hour away. Something fun to watch from a consipracy theory angle, is the unemployment rate in relation to the coming presidential election. If the unemployment rate drops to 8.0 or 8.1%, this sets up the final number, only four days before the election next month, to perhaps print 7.9%. Of course a 7.9% rate just before the election would bolster the President's chances for reelection dramatically. Thus, if the numbers today are 150K or higher and a rate at 8.0%, the republicans will be screaming foul fully aware of what is on tap next month. However, if the numbers are, say, 100K or lower today and the rate rises a tick to 8.2% or higher, the conspiracy theories will have to be tabled.

Watch UTIL 481.36 today. This number is important for all next week as per Keystone's algorithm. The bulls will drive markets higher all thru next week if UTIL is above 481.36. If UTIL is under 481.36, the bears will be pushing the broad indexes lower.  This is important since the 4 PM EST print today will provide the answer for the start of next week.  Just as last week we saw the utes set up the markets positively for this week (which turned out to be the case with Keybot the Quant flipping long on Monday and the markets are up the last four days), perhaps the bears may play the same game this week. If UTIL finishes under 481.36 today, Monday will be very bear favorable.

For the SPX today, starting at 1461, the bulls need only two points, to push up thru 1463 and an upside acceleration will occur.  The 5-minute chart shows an ascending triangle that will launch price to the strong 1468 R. If that gives way the strong 1472 resistance is next.  The bears need to push under 1451 to accelerate the downside. Thus, the bears need a bad jobs report, which will send the SPX down into the 1450's and a test of the 1451 support.  A move thru 1452-1462 is sideways action today. Spain says they do not need a bailout (which was met by laughter) which is being misinterpreted to some extent.  Spain appears agreeable to a watered-down version of a bailout but not the full-fledged bailout. There are most definitely talks occurring behind the scenes. Rajoy's popularity is dropping and with the regional elections occurring over the next couple weeks, Spain will likely not request the bailout until later this month.  Markets are surprisingly flat on this news which should create market negativity.  The jobs report is obviously in focus and will decide the fate of the markets today.  Strike up the caliope, the circus is back in town. Take your seats, the main event under the Big Top is about to begin.

Note Added 10/5/12 at 8:13 AM:  Note that the ETF splits are occurring this morning. So if you see wild numbers in your brokerage account, you likely own one of the ETF's affected. The numbers will rectify as soon as the opening bell rings. The trapeze artists are performing now. Chairman Bernanke is in a clown suit juggling bowling pins.  Geithner is on the tight rope walkling a fine line. Fed members are walking around handing out money. The Jobs number is now only about fifteen minutes away. The circus atmosphere fills the air.

Note Added 10/5/12 at 8:35 AM:  The Jobs Report is 114,000 jobs with a 7.8% unemployment rate. The U-6 remains unchanged at 14.7%. The average hourly earnings are up.  The report is better than expected. The rate number at 7.8% is the big shocker. The conspiracy theorists will have a field day today as per the discussion above. Keystone thought the number fudges would at least have the decency to wait until next month, but a 7.8% rate is in your face today. The President's poll rating should move substantially higher now that the rate is sub 8% and should easily reverse the poor debate performance.  The markets are flat on the news, frozen in place, the S&P's are a point or so higher. PM's are lower. Oil is lower. The euro is a smidge lower and the dollar a smidge higher.  Call it all flat with a slight upward bias for equities. AAPL is 666. The circus attendees run to the ticket booth demanding a refund since markets have not moved substantially on the news. Take it away conspiracy theorists, you have the data today to back up your case.