The good news is that global equities are rather quiet relative to what we saw just yesterday. European stocks are mostly in the green so far today, as are US futures markets, but tread lightly, the ice is thin. Those shares, and our futures have been quite volatile all night. FYI, today is the last day of trading for this week in China. Those markets will be closed over the next two days for that big “Victory in WW2” party. Go nuts.
I am sure that many of you have noticed the recent movements of the Russell 2000, which had been somewhat insulated from the harshest selling, and then sort of caught up to the other major indices yesterday. There will be some hype today about the “death cross”, which is what the TA crowd calls the chart formation formed when the 50 day moving average crosses below the 200. I don’t really buy into this as pure theory, but it’s hard to ignore that some traders do, and those traders react. So, does the selling beget the cross, or does the cross beget more selling? What came first? The chicken or the egg? You just need to know that it works for short term traders more often than it does not. However, it is definitely not the big deal that the hype machine makes it out to be. So, don’t fear the reaper.
There are a bevy of macro-economic data-points about to hit you today, and first among them will be the ADP Employment Report at 08:15 ET. This one is supposed to predict the Private Payrolls portion of the Non-Farm Payrolls number on Friday. Sometimes it’s close, sometimes it is not. That is neither here nor there. What is important to you is that, though they will forget this item by Friday, the futures market does tend to react to this print upon it’s release. The expectation for today is for something close to 207K, up from July’s 185K. The range today spans from 190K to 230K, so a failure to show improvement would surprise the marketplace.
Shortly after this release…at 08:30 ET, the Bureau of Labor Statistics will print their quarterly numbers for Productivity, and Costs. It’s kind of hard to know what you’re rooting for in this space. For Q2, we expect to have seen an increase of some 2.8% q/q for Productivity on a seasonally adjusted annualized rate, and a decrease in Unit Labor Costs of -0.9% q/q (also SAAR). If true, these would be great numbers if you just want to keep your job, but maybe not so hot, if what you are looking for is upward pressure on wages. We’ll also see July Factory Orders at 10am ET.
Two other significant items that will move money today are the weekly Oil Inventories print at 10:30 ET, and the Fed’s Beige Book at 2pm ET. About the Beige Book, the anecdotal evidence received from the Regional Federal Reserve banks could be dicey. Taking a look at the Manufacturing data for August that we have seen…. Philadelphia did OK, but the Empire State, Richmond, Kansas City, and Dallas all had awful months. My radar has not picked up any Fed speakers sneaking around today, so I guess they’ll take a hike opposite the BB release.
Most of you got hit in the teeth last week, and even yesterday. I know. This is not an “I told you so”…. it is a reminder that the extra expense of protecting your positions via the options market, or something more complex depending on your level of sophistication is usually well worth it. I learned this the hard way, myself, gang.
Now, take things as slow as you need to, get out there, and fight your fight. God bless.
Sarge’s TRADING LEVELS
SPX: 1955, 1947, 1926, 1906, 1895, 1880
RUT: 1149, 1139, 1132, 1125, 1119, 1110