Keystone's Morning Wake-Up 6/7/13; Monthly Jobs Report

The big day is here. The build-up to the Jobs Report rivals the hype in front of the Superbowl. There is lots of talk that a bad number means more stimulus so bad is good, but good may be bad, and others say bad is bad and perhaps good is good. Who's on first? (Abbot & Costello routine) The truth is no one knows. It is all a crap shoot this morning.  The story will be written with the Jobs Report release at 8:30 AM EST. The consensus is 165K to 170K jobs and an unemployment rate of 7.4-7.5%. Analysts have lowered estimates over the last couple days after the ADP Job Report disappointed with 135K jobs. The wild market action over the last couple weeks hint that perhaps the Fed and BOJ easy money is having less and less an affect on markets. The global central banker intervention is ongoing for over four years and although the stock market is far higher making the wealthy folks wealthier, the balance of society continues to languish through a lackluster economy. The stronger yen (lower dollar/yen) has created much of the equity weakness lately. Markets may be starting to look elsewhere for guidance forward, perhaps more along fundamental lines, so a bad jobs number may result in a dramatic sell off and a good number may result in a strong recovery rally.

Long traders are leveraged as the markets move higher week after week. If a drop through SPX 1600 occurs today, that will likely trigger many long traders to jump ship and as the leverage is taken out the markets may drop very sharply. A fall back through the 50-day MA at 1605.35 will likely signal an end to the rally from last November but as shown on this morning's daily chart, markets have bounced from the 50-day MA each time. The edge has to be given to the bulls today ahead of the data. Keybot the Quant is short but is in position to flip long at the opening bell today. UTIL 480.83 and 477.91 and JJC 41.38 are the three key parameters to watch today. Utilities are creating bullishness and copper is creating bearishness. Bears need lower utilities and bulls need higher copper. If JJC moves above 41.38, it will be obvious that the bulls are running markets higher.

The 200 EMA at 1628.30 on the 60-minute chart signals bearish markets ahead, however, price may jump above the 200 EMA today signaling the all-clear for bulls so watch this metric closely. The 8 MA is below the 34 MA on the 30-minute chart signaling bearish markets for the hours ahead but watch to see if the bulls can send the 8 above the 34 MA today, another key metric. The bulls only need to see a smidge of green as the markets open today and that will set up an immediate test of the important 1626-1629 resistance. The bears need to push under 1599 to regain their downside mojo. A move through 1600-1622 is sideways action today.

The recent earnings reports meet and beat on the bottom line EPS (earnings per share) but many companies missed on top line revenue. This indicates that companies are meeting EPS through expense reduction which means canning a few employees each quarter. In addition, the sequester cuts may be hitting more deeply. These items hint that a weaker job number may be on tap. Regardless of the headline job number and rate, the average hours worked and wages may be more important. Far too many folks are unemployed or underemployed (structural unemployment problem) as society turns into more of a part-time work force. So, 8:30 AM, about two and one-half hours from now will tell the tale. This is a huge day for markets.

SPX S/R is 1649-1650, 1634, 1626-1629, 1622, 1618, 1614, 1597-1600 and 1593.  Keystone will provide a couple of updates this morning but will likely not update the site today until this evening or on the weekend. S&P futures are -1.5 but nothing matters until the Jobs Report. The 10-year yield is 2.05%. The euro is elevated at 1.3245 keeping pressure on the dollar. Dollar/yen is 95.94 just dropping through the 96 level. At 4 PM EST today, at the closing bell, pay attention to UTIL 481.39. The two key utility levels for next week are 480.83 and 481.39 so despite any market rally that may occur today, if UTIL closes under 481.39, that places the bears in a favorable position come Monday. If UTIL closes above 481.39, then markets will likely continue rallying higher into next week. Markets tend to be weak moving through the new moon which is tomorrow.

Note Added 6:24 AM:  The yen is gaining strength again with the dollar/yen now dropping to 95.69. S&P futures now -3. This behavior shows that the dollar/yen and SPX continue to move together. Keystone is searching through desk drawers for dramamine and heart pills to get through the day.

Note Added 8:26 AM:  Dollar/yen 95.72, flat. Euro 1.3259,moving higher. 10-year yield 2.09%,moving higher. S&P +2.75, moving higher. Here comes the Jobs Report...........

Note Added 8:35 AM:  Dollar/yen 95.43. Euro 1.3253. 10-year yield 2.09%. S&P +8 but all over the map. Markets are gyrating as the information is digested.  Jobs are 175K up from a revised 149K last month. The number was dead in-line with consensus. The revisions are lower which is disappointing. The unemployment rate is up a tick to 7.6%.  No change in hourly earnings.

Note Added 8:41 AM:  Dollar/yen 96.00. Euro 1.3239. 10-year yield 2.10%. S&P +9.25. Dow +68. Nasdaq +18.  The euro is moving a touch lower so the dollar/yen moves higher. Copper is negative. Looks like some tentative indecision on the initial reaction so the upside is given the nod.

Note Added 10:39 AM:  The bulls are running higher. Keybot the Quant flips to the bull side today at SPX 1633. Watch utilities today as described above. UTIL is elevated with a 486 handle. Weakness remains in copper. SPX is printing the highs thus far today approaching 1640 moving up through the important 1626-1627 resistance, the 200 EMA on the 60-minute chart at 1628.46 (signaling bullish markets for the hours and days ahead) and the strong 1634 resistance. Next strong resistance is 1649-1650. The 8 MA moves up through the 34 MA on the 30-minute chart signaling bullish markets for the hours ahead. The bulls are having a party ahead of the weekend.