Today’s Spotlight Market
U.S. Bond bears have been thwarted in their attempts to send yields higher as the weakness in equity markets combined with increasing incidents of global unrest have sent investors back into U.S. Treasuries. The last up move in yields for 10-Year Treasuries found resistance at the 200-day moving average which has stopped the yield rally since April. This morning?s Non-farm Payrolls report could be the next catalyst for 10-Year Note yields which are currently near 2.40% and range bound between support at 2.30% and resistance at 2.62%. ?
Fundamentals
The beginning of the 4th quarter has not been kind to equities as the major U.S. Indices are in the midst of a corrective phase. So far the slump has been minimal, despite some of the talk from market pundits on the major financial shows, with the S& P 500 down just under 4% from all time highs. While short-term momentum currently favors equity bears, we should note that we are still over 40 points above the August lows, which was the last time talk was abound about the start of a major stock market correction, only to see the benchmark indices race to new all-time highs 4 weeks later.
This morning, traders will be keeping their focus on the always anticipated release of non-farm payrolls for the previous month. The September report will be of particular interest to see if the U.S. Bureau of Labor Statistics will revise higher the disappointing 142,000 jobs created figure reported in the August report. The forecast for private sector jobs is a bit more encouraging as the ADP National Employment Report shows 213,000 private sector jobs were created in September, with 88,000 of those created by small businesses.
Estimates for this morning report seem to vary widely with the general consensus calling for a gain of around 210,000 jobs. However, traders may really be expecting the figures to come in even higher than the consensus to account for the ?anomaly? of last month?s figures. The unemployment rate is expected to remain unchanged at 6.1%, but economists are more likely to focus on the so called U6 employment rate which takes into account part-time workers who would rather have full-time employment.? Here the rate is 12.0% and is a closer indicator to the true employment situation in the U.S.
Technical Notes? – ? View Today’s Chart
Looking at the daily continuation chart for the E-mini S&P 500 futures, we notice that the trend-line drawn from the October 2013 lows is being tested. This line has withstood previous price corrections this past year so a successful defense is critical for bullish traders. Lurking below this trend-line is the 200-day moving average (MA), which is currently hovering just below the 1900.00 price level. Failure to hold above the 200-day MA would provide further momentum for bearish traders and signal a potential move towards major chart support around 1850.00. The 14-day RSI has turned weak, but not yet at oversold levels with a current reading of 36.36. Chart support is seen at the August 8 low of 1890.25, with resistance seen at 1955.50.
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