Happy Friday, my friends! Let's get right into it today. So stocks and bonds alike are experiencing some weakness this morning, after November payrolls came in (much) weaker than expected. After a strong September and October with 711k, and 610k jobs added respectively, Novembers print was a massive disappointment (and miss), with just 245k jobs added vs exptations of 450k. This was the lowest print since we rebounded from the crash back in May.
The sectors most affected were government with a loss of 86k jobs (as Census employees were rolled off), and also retail which saw 35k jobs lost. It's clear that businesses are already starting to cut costs as we head into what may be a brutal winter season. Unemployment dropped slightly from 6.9% to 6.7%. Let's see how markets react in the cash open, as traders and investors digest increasing labour market weakness. Maybe for a change, bad news will be bad news.
Bond yields are spiking, and the 10Y yield appears to be making a run for 1%. We're currently sitting at .96, after a session low of .90 this morning. The majors are up about quarter of a percentage point, but seeing some notable weakness as we approach the cash open. SPY is still moonwalking at all-time high's, and above the megaphone trendine. But, we lost the ascending trendline yesterday at the close, so it's possible the bears finally show up today, and try to recapture the megaphone. I'm expecting December to be an outside reversal candle, with heavy selling as we approach Jan 1. Remember, many of the FED's lending programs expire by EOY, so this could put pressure on risk assets across the classes. Also, many payroll protection programs/unemployement aid, expire in December also, so this could be a bit of a sh*t storm for risk heading into year end. Trade accordingly.
As always, stay tuned for live updates throughout the day, and thank you for your time guys! If you enjoyed today's analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. Cheers, Michael.
The sectors most affected were government with a loss of 86k jobs (as Census employees were rolled off), and also retail which saw 35k jobs lost. It's clear that businesses are already starting to cut costs as we head into what may be a brutal winter season. Unemployment dropped slightly from 6.9% to 6.7%. Let's see how markets react in the cash open, as traders and investors digest increasing labour market weakness. Maybe for a change, bad news will be bad news.
Bond yields are spiking, and the 10Y yield appears to be making a run for 1%. We're currently sitting at .96, after a session low of .90 this morning. The majors are up about quarter of a percentage point, but seeing some notable weakness as we approach the cash open. SPY is still moonwalking at all-time high's, and above the megaphone trendine. But, we lost the ascending trendline yesterday at the close, so it's possible the bears finally show up today, and try to recapture the megaphone. I'm expecting December to be an outside reversal candle, with heavy selling as we approach Jan 1. Remember, many of the FED's lending programs expire by EOY, so this could put pressure on risk assets across the classes. Also, many payroll protection programs/unemployement aid, expire in December also, so this could be a bit of a sh*t storm for risk heading into year end. Trade accordingly.
As always, stay tuned for live updates throughout the day, and thank you for your time guys! If you enjoyed today's analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. Cheers, Michael.
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The majors are getting panic bid here in the first 30 minutes of trade. What did I miss? Or maybe bad news is still good news. Let's see how much gas this rally has in the tank...
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Right now the bulls be like, "I'm Luke Skywalkin' on these haters."
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10Y yield is getting very close to that 1% milestone. Bond investors didn't like the payrolls print at all. Or perhaps they're getting out of bonds in anticipation of a crash when the FED's municipal and corporate lending programs end in a few weeks...
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Looks like we may be on the verge of a breakout in the Put-to-Call ratio...
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For those of you who don't typically use the Put-to-Call ratio in your analysis, the way it works is when it's high, investors are fearful, and when it's low, investors are confident (like right now). It's usually used as a powerful indicator of overall market sentiment. If sentiment shifted negative, you'd see a notable spike in the Put-to-Call ratio, which is what I'm expecting to see above.
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Vix is catching a consistent bid this afternoon. Looks like we started trending up around 11:30AM...
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SPY losing steam here as we approach the final hour of trade for the week...
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Minor divergence here between SPY and Vix on the 1 minute. Are we seeing an accumulation of risk protection heading into the weekend?
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I just read the Mayor of Los Angeles banned walking, among other things, as new lockdown measures begin (not kidding). I don't know about you guys, but I don't even shower without a mask. I usually faint, though (kidding).
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Vix is breaking down, and is now back at the low's of the day around 20.6. Stocks are marginally higher on the day, and week. But, SPY continues to tread water at all-time high's. It's almost comedic how distored price discovery is. No matter the valuations you show investors, price seems irrelevant. We could be at 500 right now, and sentiment would be bullish. Let's see what happens as we approach the final 15 minutes of trade...
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Bulls making a run for the moon. Nothing in their way, except logic...
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That's a wrap folks! It was another successful week for the bulls, as we ended the week at all time high's on the majors. Vix got hammered into the close (as usual), but held onto a 20 handle. No bears showed up at the end of the week to recapture the megaphone or even the ascending trendline. I'm starting to wonder what investors are being told on the sell-side. Advisors don't know enough about economics to understand you can't print GDP. Zimbabwe is a perfect example. Everyone is a billionaire. But, their entire stock portfolio buys just one loaf of bread. Is that where we're heading? Not a chance.
I hope you guys had a great week. I'm wrecked. I'm going to grab a glass of wine, and unwind. I look forward to seeing you guys next week, energized, refreshed, and ready for another game of up is down. Have a great weekend!
Cheers, Michael.
I hope you guys had a great week. I'm wrecked. I'm going to grab a glass of wine, and unwind. I look forward to seeing you guys next week, energized, refreshed, and ready for another game of up is down. Have a great weekend!
Cheers, Michael.
