Morning Market Prep March 9, 2018

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Employment Situation

The 800-pound gorilla in the room today is the Employment Situation report and what it may or may not reveal about inflation.  Consensus suggests the unemployment rate will drift lower to just 4% and could point to wage pressures.  The SPY by the close of the market yesterday defeated the 50-day average but only by half a point.  The Dow continues to lag behind struggling with the 25,000 level and still 390 points below its 50-day average.

Price action the last couple days has been encouraging with the bulls defending against pullbacks.  If the Employment Situation report shows inflation is in check, the bulls appear to have the upper hand.  Expect fast price action after the open and keep in mind whipsaw are possible due to the overall market volatility.

On the Calendar

We have the biggest report of the week on the Economic Calendar before the market open.  The Employment Situation comes out at 8:30 AM may provide clues that will influence the FOMC coming decision on interest rates.  According to consensus, February non-farm payrolls are expected slightly higher at 205,00 vs. the 200,000 reading in January.  The unemployment rate is expected to tick down to 4.0%, but hourly earnings, rising only by a modest 2% in the month with year-on-year holding at 2.9%.  We have one Fed Speaker today that is speaking three times 8:40 AM, 10:45 AM and finally 12:45 AM.  There are two other non-market moving reports such as Wholesale Trade at 10:00 AM and the Oil Rig Count at 1:00 PM.

On the Earnings Calendar, we have just 73 companies reporting results today.

Action Plan

Once again it was encouraging to see the bulls hang in there yesterday and not give in to all the hype over trade wars.  In fact, if you judge by the market reaction, the President’s plan thus far was a non-event.  This morning it’s all about the Employment Situation report.  Unfortunately, all we can do as retail swing traders is to deal with the gap up or gap down that it’s capable of producing at the open.  As I write this, futures markets are essentially flat as the market waits.

A report that does not display inflationary pressures could move the market higher which the price action seems to favor at the moment.  Of course, if inflation is seen raising its ugly head enough to cause an FOMC reaction the market tone could quickly shift bearish.  Only time will tell, and all we can do is patiently wait for the open.  I wish you all a great day and a fantastic weekend.

Trade Wisely,

Doug

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