Keystone's Morning Wake-Up and Midday Market Action 8/2/13; Monthly Jobs Report

The Jobs numbers are imminent. Consensus is 183K but everyone expects 200K or more due to the ADP Report. The unemployment rate is expected to drop a tick to 7.5% from 7.6% last month. Watch the hours worked, wages and the labor participation rate. The Personal Income and Spending data is equally important but takes second billing compared to the jobs circus. The 10-year Treasury yield popped higher on the happy ADP number on Wednesday so the anticipation would be for yields to pop again if jobs are over 200K. The interesting aspect is that the 10-year yield is at the 2.74% level on the verge of a breakout so the jobs report will either cause yield to bounce, or die. The dollar and gold, as well as the U.S. futures, will move on the data. S&P's are +3, Dow +22 and Nasdaq +13.

Note Added 8:52 AM:  S&P's -3.50, Dow -28 and Nasdaq +4.5. The 10-year yield collapses to 2.61%, 13 basis points, now printing at 2.62%.  Dollar/yen 99.11. Euro 1.3267. The dollar weakens and gold and silver pop on the Jobs Report. Gold moves up since traders think that more Fed QE is on the way. Copper is up strongly this morning and will help the bull case for equities today.  The Jobs number is 162K jobs created far under the consensus. The unemployment rate drops to 7.4% from 7.6%. Average hourly earnings dropped one-tenth of a percent. For those looking for jobs, this news is bad since if wages are not rising, there is no need for new employees. Wage deflation is also a key metric for the inflation-deflation debates. If there is wage deflation occurring, inflation overall is not an issue and cannot exist. Companies are simply whipping workers to work harder for the same or less and if they do not like it they are told that ten other people want to sit in their chair. Not exactly the sign of a robust economy. May and June jobs numbers were revised lower, however, the stock market enjoyed all the gains from all those happy reports already. Labor participation rate drops as folks simply give up at finding a job. If you find a job, it requires you to say "Do you want fries wit dat?" all day long. Obamacare is turning many workers into part-time employees since employers want to avoid the cumbersome regulations and costs of the new law. The sequester furloughs are likely biting as well.

Note Added 9:04 AM:  Copper and volatility remain the battle zone today. Bulls need JJC 39.02 and the bears need VIX 14.26.  Copper is up today so the 39.02+ number should print and this provides the bulls the upper hand. Keybot the Quant remains long but is on the edge of wanting to go short, but probably not until perhaps next week; copper and volatility will tell the tale. JJC above 39.02 will move the SPX higher. For today, the SPX begins at 1707 and all the bulls need is one-point higher, to touch the 1708 handle, and it is off to the races higher for equities. Bears need to retrace yesterday's move and push under 1690 to regain mojo, a lofty goal, but anything is on the table in these erratic, unstable and indecisive markets. A move through 1691-1707 is sideways action today. The TRIN prints an uber low 0.49 that provided bull fuel yesterday, that also now begs for a snap-back to 1.00 and higher, corresponding to market selling, either today or Monday.

Note Added 9:48 AM:  SPX 1701.46.  Both SPX and VIX are lower so one of them is wrong. JJC is 39.27 well above the bull-bear danger line favoring bulls moving forward. TRIN 0.91 in the bull camp after a brief pop above one after the opening bell.  10-year yield 2.63%. Dollar/yen 99.20. Euro 1.3266. The bulls are unconcerned today since copper will provide bull fuel. Intermittent Internet outages and technical issues are occurring today in southwest Pennsylvania.

Note Added 10:32 AM:  JJC 39.30 going higher, VIX 12.47 going lower, TRIN at 0.83, so the bulls scoff at any initial downside action today. Equities are recovering.  Dollar/yen 99.02 slightly lower in concert with the lower equities. The 8 MA on the 30-minute is 1705 so bears can stay in the game today if they keep the SPX under 1705 and heading lower but if price moves above 1705 and higher, the bears will fold like a cheap suit and the SPX will head towards 1710+.

Note Added 3:07 PM:  Copper leaks lower today and JJC is 38.86 dropping under 39.02 so the bears are fighting back. Markets are back to a standoff. Either JJC 39.02 takes markets higher or VIX 14.26 takes markets lower.  Volatility is crushed today with VIX down to 12.11. TRIN 1.00 dead neutral not picking a side today reinforcing the sideways theme. SPX is 1706.03. Markets are typically bouyant for the first few days of a new month that would end on Tuesday. On Friday afternoon's, markets tend to float higher as short sellers pare back positions in front of the weekend. The new moon is Tuesday and markets are typically weak through the new moon. So the bulls are favored, based on seasonality factors only, into Monday afternoon.

Note Added 3:42 PM:  SPX, Dow and Nasdaq all positive. RUT negative. VIX 12.07 as the Fed members take turns beating volatility with a baseball bat. JJC 38.86. TRIN 0.98. Markets are stumbling into the closing bell with an upward bias.