Before the release of the Non Farm Payrolls last week on Friday, US markets could not catch a break. Lower highs and lower lows were put in on the daily chart of the S&P 500 after the new high was printed on November 29th. On Thursday, stocks took the day to consolidate inside the prior days price range, but exploded to the upside at 7:30 cst. Markets were treated to a better-than-expected jobs number where 203,000 jobs were created and the jobless rate in the US hit a five year low. Additionally, Consumer Confidence in the US shot up to a five year high soon after the jobs numbers were posted. In short, LAST WEEK traders and investors used favorable reports as a reason to buy equities. The big question is whether the stock market will react the same way THIS WEEK, when data is released. We will have to wait and see.
There is far less important economic data being released in the US compared to last week, but we will hear from multiple FED Members and will also be informed on the ongoing budget negotiations in Washington. Traders will be focused on the language being used this week to determine whether the FED plans to taper their Bond Purchases before 2013 comes to a close or not. This language will be important as investors try to decide whether or not they will continue to buy the market in new high territory this week. Pre-Market, futures are only a few ticks below the high that was printed on the 29th.
I feel the best way to approach this week is as a technical trader. The plan will be to break down price action on both daily and intraday charts, looking for the best technical prices to enter and exit trades. I think it will be far too difficult to make dependable commitments to any Financial market when the US Indexes are testing the highs again and waiting for speeches from the very members that will decide next week whether or not they will taper.
It appears the Gold Futures may be waiting on the same confirmations. Last week, while the market did see some nice volatility in a range, we did not see a test of $1200 or a breach of the prior week’s highs. I believe that Gold traders are waiting like the rest of us for a final determination from the FED before either levels are tested again. The language used this week by FED Members may give clues in advance of next week’s meeting as to whether or not we should expect Ben Bernanke to close out 2013 with a slam in the equity markets.
If you would like to discuss trading in the Futures and Futures Options markets with me, please feel free to call or email me directly. You can reach me directly at (888) 272-6926 or by email at [email protected].
Thank you for your interest,
Senior Market Strategist
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