Business
Stocks fall, Treasury yields rise as Wall Street worries about jobs report
US stocks fell on Friday as Wall Street weighed down the government’s monthly employment report, which showed business conditions remained tight in September, despite a slowdown in hiring.
US economy Add 263,000 jobs Last month the unemployment rate fell to 3.5%. Economists expected a salary gain of 255,000 and unemployment to remain at 3.7%.
S&P 500 Index (^ Salafist Group for Preaching and Combat) is down 1.8%, while the Dow Jones Industrial Average is down (^ DJI) approximately 400 pips or 1.3%. Nasdaq Composite (^ ninth) led the way lower, down 2.5%. Meanwhile in the bond market, Treasury yields soared, with benchmark 10-year notes jumping 7 basis points to 3.9% and the two-year yield 8 basis points to 4.3% in the wake of the issue.
“The negative market reaction could be a sign that investors are addressing the possibility of no change in the Fed’s tough playbook in the near term,” said Mike Lowengart, head of model portfolio creation at Morgan Stanley’s Global Investment Office, in a statement. note. “Keep in mind that the next Fed decision won’t be until early November, so more data needs to be absorbed, not least the inflation gauge next week.”
Investors were betting on it Signs of a cold labor market That would force Fed policy makers to change course in the course of raising interest rates, particularly after a string of weak economic data showed Sharp contraction in manufacturing activity And the Fewer job opportunities. But many Wall Street strategists have argued that hopes of an imminent pivot are premature, a sentiment that this jobs report appears to bolster.
In recent research notes, JPMorgan analysts said stock bulls will need monthly payroll readings as low as 100,000 to see the market shift the Fed’s outlook, while Bank of America analysts said the pivot won’t happen “until payrolls are affected.”
A team at Bank of America led by price research strategist Megan Swiber noted that “the Fed’s job is still far from over: expect the increases to continue until negative payrolls are nearly within reach.”
Moreover, Fed officials themselves have sent clear messages in recent weeks that there are no plans yet to undo aggressive political intervention.
“We have to go further,” Chicago Fed President Charles Evans said Thursday, noting that Benchmark rate likely to be at 4.5% to 4.75% By the spring of 2023.” “Inflation is now high and we need a more restrictive monetary policy setting. “
US crude oil futures continued This week’s rally in the wake of the heaviest OPEC + Production cuts since 2020. DataTrek Research has indicated that West Texas Intermediate (WTI) crude at more than $85 a barrel will prolong positive energy inflation trends until at least the beginning of 2023. The company also noted that oil prices are an “underappreciated anchor issue” of the Federal Reserve and market expectations for near-term economic growth. West Texas Intermediate crude futures traded above $90 a barrel early Friday, up $10 this week.
Elsewhere in the market, chip makers came under pressure Friday morning after Advanced Micro Devices (AMD) Lowered revenue guidance for the third quarter He cautioned against making “significant” inventory corrections across the computer supply chain. Shares are down 9% at the start of the session. As was the burden on the sector Samsung reported its first profit drop since 2019another sign of the chip market turmoil.
Levi Strauss (fibrous) was also a mover on Friday after the retailer cut its guidance, citing headwinds from a stronger dollar, sluggish consumer demand and continued supply chain continuity. The stock fell nearly 9% on Friday.
Meanwhile, DraftKing shares (DKING) rose 4% after Bloomberg News reported Thursday that ESPN is also Approaching a big new partnership deal With the sports betting company, citing sources familiar with the agreement.
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Business
Bankman-Fried May File Petition in New York Federal Court Next Week Before Judge Louis Kaplan By Cointelegraph
Former FTX CEO Sam Bankman-Fried is set to appear in court on the afternoon of January 3 to enter a lawsuit over two counts of wire fraud and six counts of conspiracy against him related to the collapse of cryptocurrency exchange FTX, according to Reuters. mentioned on December 28, citing court records. Bankman-Fried will appear before District Judge Lewis Kaplan in Manhattan.
Judge Kaplan was appointed to hear the case on December 27 after the original judge in the case, Ronnie Abrams, Resigned herself because of connections between FTX and the law firm Davis Polk & Wardwell, where her husband is a partner. The company provided advisory services to FTX in 2021.
The US stock market, according to the S&P 500 index SPX typically rises just over 1% over that time period. With the exception of Thursday’s powerful session, Santa Claus is missing in action, but there is still time. A side effect of this system is that if the market Failure To record gains over the 7-day period, this is a negative sign going forward. Or as Hirsch so eloquently put it: “If Santa Claus fails to call him, bears may come to Broad and Wall.”
The SPX chart itself has resistance at 3900-3940, after crashing below 3900 in mid-December. So far, there has been support in the region of 3760-3800. Thus, the market is range bound in the short term. Don’t expect that to last for long. From a slightly longer-term perspective, there is heavy resistance reaching 4100, which is where the stock market rally in early December failed. On the downside, there should be some support at 3700, and then a yearly low at 3500. Of course, the bigger picture continues to be that of a bear market, with trend lines sloping down (blue lines in accompanying SPX chart). We do Not Have the McMillan Volatility Band (MVB) signal in place at this time. SPX needs to move outside of +/- 4σ “Adjusted Bollinger Bands” to produce such a signal.
There has been massive buying recently, and buying percentages have been steadily rising because of that. These ratios have been in sell signals for a few weeks now, and as long as they are trending higher, these sell signals will remain in place. This applies to all of our buy-to-buy ratios, especially the stock-only ratios (accompanying charts) and the total buy-to-buy ratio. The CBE’s share-only buying ratio hit a huge number on December 28, but there are some arbitrage implications there, so that number may be overestimated. the Basic The ratio is near its yearly highs, which means it is definitely oversold, and weighted The ratio is starting to approach oversold levels as well. However, “Oversold does not mean overbought.”
The market breadth has been weak, therefore our wide oscillators remain sell signals, albeit in the oversold territory. The NYSE Breadth Oscillator attempted to generate buy signals on two recent occasions, but ultimately failed. The “Stocks Only” display oscillator did not generate a buy signal. We also monitor the difference between these two oscillators, which is oversold as well – after a buy signal failed recently.
One area that is slightly improving is the new 52-week highs on the New York Stock Exchange. Over the past two days, the number of new highs has been over 60. That may not sound like much, and it really isn’t – but it’s an improvement. However, for this indicator to generate a buy signal, the number of new highs must exceed 100 for two consecutive days. This may be difficult at the moment. The most optimistic area is volatility (VIX, to be exact). VIX She is still in her own world. Yes, it has risen slightly over the past two days, in what appears to be a concession to the sharp drop in stock prices, but overall, the technical signals from the VIX are still bullish for stocks. There is a “peak high” buy signal in place, and VIX direction The buy signal is also still active. The VIX would have to close above the 200-day moving average (currently at 25.50 and falling) to cancel VIX direction Buy signal, and it would have to close above 25.84 (mid-December high) to cancel the ‘peak high’ buy signal.
the Building Derivatives volatility remains bullish in its outlook for stocks as well. The term structures of both VIX futures and CBOE volatility indexes slope upward. Furthermore, all VIX futures are trading at healthy VIX premiums. These are positive signs for stocks.
In short, we continue to maintain a “fundamental” bearish position, due to the bearish trend on the SPX chart and due to the recent breakdown below 3900. There are also negative signals from the Bought and Breadth ratios (although both are oversold). The only current buy signals come from the volatility complex. Therefore, we will continue to trade the confirmed signals around this “core” position.
New recommendation: Chevron (CVX) There is a new buy signal for the buy-to-buy ratio in Chevron Buy 1 CVX February (17The tenth) 180 calls
At 7.20 or less.
CVX: 177.35 Feb (17.35).The tenth) 180 call: 7.00 bid at 7,20,000
We will hold this position as long as CVX’s buy-to-buy ratio remains on a buy signal. Follow the movement:
All breakpoints are mental breakpoints unless otherwise noted.
We use our “standard” rolling procedure Spread: In any bull or bears vertical spread, if the basic hits the short strike, roll over the entire spread. That would be a roll Top In the event of a bull call spread or roll Down In the event of a bear outbreak. Stay at the same expiration, and keep the distance between strikes the same unless otherwise instructed.
Long 2 SPY Jan (20The tenth) 375 lays and shorts Jan 2 (20The tenth) 355 places: This is our “basic” bearish position. As long as the SPX remains in a downtrend, we want to maintain the position here. Long 2 KMB Jan (20The tenth) 135 calls: It is based on the buy-to-buy ratio at Kimberly-Clark Long 2 IWM Jan (20The tenth) 185 Calls Through the Money and Short 2 IWM Jan (20The tenth) 205 calls: This is our bullish seasonality basis between Thanksgiving and the second trading day of the new year. Get out of this iShares Russell 2000 ETF The position at the close of trading on Wednesday, January 4, the second trading day of the new year.
Long 1 SPY Jan (20The tenth402 call and Short 1 SPY Jan (20The tenth) 417 calls: This spread was bought at the close on December 13thThe tenth, when the most recent VIX “peak high” buy signal was generated. Stop yourself if the VIX closes later above 25.84. Otherwise, we will hold for 22 trading days.
Long 1 SPY Jan (20The tenth389 Lay and Short 1 Spy Jan (20The tenth) 364 put: This was in addition to our “core” bearish position, created when the SPX closed below 3900 on December 15th.The tenth. Stop out from this spread if it is SPX Close above 3940. Long 2 PCAR Feb (17The tenth) 97.20 puts: This puts on Paccar Purchased on December 20thThe tenth, when they finally traded at our buy limit. We will continue to maintain these positions for as long as possible weighted Buy-to-buy ratio on a sell signal.
Long 2 SPY Jan (13The tenth) 386 calls and Short 2 SPY Jan (13The tenth) 391 calls: This is a trade based on the seasonal positive “March of Santa Claus” time period. There is no downtime for this trade, except for time. If SPY is trading at 391, roll the entire spread up by 15 pips on each side. In any case, exit your spreads at the end of trading on Wednesday, January 4th (the second trading day of the new year).
All breakpoints are mental breakpoints unless otherwise noted.
Lawrence G. McMillan is the President of McMillan Analysis, a registered investment and commodity trading advisor. McMillan may hold positions in securities recommended in this report, either personally or in client accounts. He is an experienced trader, money manager, and author of the best-selling book, Options as Strategic Investing. www.optionstrategist.com Send questions to: lmcmillan@optionstrategist.com.
Disclaimer: © McMillan Analysis Corporation is registered with the Securities and Exchange Commission as an investment advisor and the CFTC as a commodity trading advisor. The information in this newsletter has been carefully compiled from sources believed to be reliable, but accuracy and completeness are not guaranteed. Officers or directors of McMillan Analysis Corporation or accounts managed by such persons may have positions in securities recommended in the advisory.
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Opinion: The stock market is range-bound in the short term. Don’t expect that to last long.
SPX,
Struggled this week overall, during a typically seasonal upswing. This is what Yale Hirsch called the “Santa Claus Walk” 60 years ago. It covers the time period of the last five trading days of one year and the first two trading days of the following year.
VIX,
CVX,
Coming from an extreme oversold condition. So, we’ll take a long stand here:
spy,
KMB,
This ratio has now turned into a sell signal, so sell these calls to close the position.
iwm,
PCAR,
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Beyoncé celebrates her sister Solange’s new music made for the New York City Ballet
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The Bank of England buys bonds in an attempt to stop the spread of the crisis
