SPX S&P 500 Daily Chart; Holding at 5500 Support Before the Critical US Monthly Jobs Report

The stock market is stumbling along awaiting the critical US Monthly Jobs Report at 8:30 AM EST Friday morning (Friday afternoon in the UK and Europe). The consensus is for the unemployment rate to drop from the spike higher last month to 4.3%, back down to 4.2%. If the jobless rate drops to 4.2% or lower, Pope Powell will be on track to bestow a 25-bip rate cut on the markets on Wednesday, 9/18/24, only 2 weeks away. If the unemployment rate remains at 4.3% and higher, especially if it would spike again to say 4.5% or higher, that places a 50-bip cut on the table. Let it be said, let it be written, let it be done. Yul thumps his chest and coughs from the advanced lung cancer.

Stocks are uninspired until the jobs report so tomorrow may be another placeholder day. There is other jobs data including Claims tomorrow morning that will provide warm-up entertainment for the big jobs show on Friday morning. Welcome Back My Friends. Come inside, the show's about to start.

The SPX came all the way up to near all-time highs again to fill that gap at the prior top (orange circle). Now the bears become smarter, buttoning-up the price action as she comes off the top this time not leaving any gaps behind (no reason to go back up). There are several gaps below that need filled.

Price falls Tuesday to touch the 50-day MA at 5506 and bounce. Note that the 20-day MA was crossing up through as well creating a triple-confluence at the 5500-5506 area. The SPX comes down again today to test the 50-day MA for the second time, and bounce again, and then end the session at 5520 sitting on the 20-day MA at 5518 and rising.

The signal could not be louder. Take a purple crayon and bite the tip off so it makes a thick line. Keystone likes purple crayons because they taste like grapes. Draw a critical support/resistance (S/R) line at the 5500-5520 range encompasses the 20 and 50-day MA's and the price action over the last couple days. Put simply, bulls win big going forward if they send the SPX above 5520 heading higher. Bears win big if the SPX falls below 5500; there will be Hell to pay.

Tomorrow will not matter too much since the jobs report will be imminent. If the SPX starts dropping like a rock, the 100-day MA at 5372 and rising would be a strong support level for price. The entire US stock market and global markets are riding on the BLS data that is known to be problematic. That's funny. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added Friday Morning, 9/6/24, at 6:03 AM EST: The SPX fell through 5500 yesterday but regained its footing to close at 5503. The jobs report drops in 2-1/2 hours. The 50-day MA is 5507. S&P futures are weak but none of this matters until 8:31 AM EST. All eyes are on the unemployment rate now at 4.3% and expected to drop to 4.2%. This will usher-in the 25-bip cut on 9/18/24. If the rate jumps higher, the 50-bip cut will be on the table. The jobs circus is back in town including the food trucks and market clowns. If you listen close, you can hear the calliope.

Note Added Friday Morning, 9/6/24, at 8:50 AM EST: The 2-year yield is 3.66% and the 10-year yield is 3.69%. The yield curve has dis-inverted, or normalized, to plus 3 basis points. The jobs report disappoints on the headline jobs number and with prior revisions, but the rate drops from 4.3% to 4.2% as estimated. Index futures bounce around after the report that has something in it for everyone. Futures say there is a 50/50 chance of a 50-bip cut in 12 days. Check this out. The unemployment rate last month was 4.253% and rounded up to 4.3%. Today's rate is 4.221% rounded down to 4.2% providing the 10 bips of separation but in actuality, the two rates over the last month are only 3 bips, or 0.032%, apart. The wages beat by a tick on the month to month and annually so the inflation folks are waving these numbers in the air proclaiming persistent inflation ahead. Wages are key. That is why it was comical to hear folks clamoring about inflation from 2009 on, when quantitative easing started, but inflation was on a milk carton (missing) for many years. The wages did not go above 4% so you knew inflation was not going to be a problem and it was not. In recent years, however, wages jumped above 4% fueling inflation. The annual wages had fallen back below 4% and this morning's number maintains that trend at 3.8% annual wages. This is not a problematic number for inflation. When annual wages are above 4.0%, that is the time you start to factor in inflationary concerns and if wages tag 4.5%, inflation is guaranteed going forward. We are not in this situation now. This is why the Fed is worried about the labor picture more than inflation. The SPX will probably stagger around 5500-5520 until it decides which side to exit.

Note Added Friday Afternoon, 9/6/24, at 2:40 PM EST: The 2-year yield is 3.65% and the 10-year yield is 3.71%. The yield curve has dis-inverted, or normalized, to plus 6 basis points. The spread ends the week at +0.06% the first close above the zero inversion level since 7/1/22; that's a big deal. The 2-year yield drops to 3.65% the lowest since March 2023 and September 2022. The 10-year yield also drops to 3.65% the lowest since June 2023. Creepy Mister Recession is knocking on the back door and wants your bag of sugar and this time it is No More Mr Nice Guy. Cool, Orianthi was touring with them then. The consensus is that Powell will stick to the 25-bip cut in 12 days but this may lead to a policy mistake. The next FOMC meeting after 9/17/24-9/18/24 is in November. Thus, if the economy and markets go off a cliff a couple days after the 25-bip cut on 9/18/24, the Fed will have made a policy mistake (they should have likely started the cuts sooner, maybe in July, or go stronger on 9/18/24 with a 50-bip cut). If the economy and markets hang in there this month and through October, Powell will look like a genius with a 25-bip cut. What will be the outcome? Will Powell stick with the 25-bip cut? Can America's have's, made filthy rich by the Fed's obscene decade and a half of money-printing, continue to support the economy and stave off the recession, or will they join the have-not's and opine about the way things used to be while standing in the unemployment line? The SPX loses the 5500 support. The stock market tanks yesterday the SPX collapsing 95 points, -1.7%, to 5408 exactly at the 20-week MA support at 5406; time to bounce, or die, from this uber important support. The 100-day MA is 5379 and typically acts as interim support when price is dropping.