Keystone's Morning Wake-Up 1/4/13; Jobs Report; Factory Orders

The Monthly Jobs report is less than one-hour away.  The market drama comes in waves nowadays.  The consensus is 153K jobs, above last month's 146K jobs, with a rate flat at 7.7%.  If a 300K number should occur, that would signal that the economy is getting much better, and if the FOMC is now hinting at less QE, equities may view that as a negative since the punch bowl may end a lot faster than anyone thinks.  The ADP Report is projecting jobs at 200K.  A number between 150K and 250K would likely be friendly for stocks. Less than 150K should create disappointment in equities, however, traders would realize that an end to QE would not be on the table. Pay attention to last months revision (146K), the average hourly earnings and average work week.  If wages remain stagnant and hours worked are flat, companies have no intention of hiring anyone moving forward. Lots of moving parts, keep plenty of coins in your pocket so you can flip the outcome. Keystone is thinking that jobs will be at the low end of the range.

Three key parameters dictate market direction; the now bearish UTIL 466 and GTX 4958 and the now bullish VIX 16.50. Thus, bulls want to see the utilities or commodities break up thru the levels listed while the bears want to see the VIX move back up thru 16.50 so they can regain some mojo. If the three musketeers do not flinch today, like yesterday, the markets continue sideways. The higher dollar is pounding commodities, copper, gold and silver today so the GTX will probably drop and become even more bear friendly. Copper, JJC 45.40 may gain importance today so keep an eye on that level. For the SPX today starting at 1459, the bulls need to touch 1466 and an upside acceleration into the 1470's will be on tap as price punches thru the 2012 closing high at 1465.77 and targets the intraday 2012 high at 1474.51. The bears need to push under 1456, only three points lower, to create a downside acceleration. A move thru 1457-1465 is sideways action today. CPC put/call is 0.84 dropping strongly yesterday showing the complacency in traders remains with the majority of folks in the market fully expecting markets to continue up indefinitely (CPC is a contrarian indicator).

The Monthly Jobs Report is 8:30 AM and will immediately impact the futures, the dollar and Treasury yields.  Factory Orders and Non-Mfg ISM Index is at 10 AM which will create a market pivot point. Natty Gas Inventories are 10:30 AM.  MOS earnings were mixed this morning and the stock is down pre-market.  All the action is front-loaded today, so the first couple hours of trading are key, then traders will settle in and look forward to the weekend. Markets typically experience Friday afternoon buoyancy due to short traders paring back positions to avoid positive weekend risk, but in the current markets a lot of these standard guidelines and seasonality factors take a back seat to the ongoing political clown show.

Note Added 1/4/13 at 8:45 AM:  The jobs are 155K with an upward revision to last months to 161K. The unemployment rate is 7.8% so in line with estimates. Average hourly earnings bump up 0.3% so this is encouraging for folks out of work. The next couple months will dictate if a new positive trend is developing in wages which would lead to hiring, or not.  The 155K number remains shameful since that barely handles the new workers coming into the workforce let alone the 25 million folks that are either unemployed or underemployed. Shameful. The jobs number was Goldilocks, not too hot, not too cold, so the futures remain flat a little on the positive side.  The 10-year yield is 1.93%.