Morning Futures Roundup

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So Much for a Stronger Jobs Report!

 
  Fundamentals

The Labor Department certainly threw a wrench into equity traders' enthusiasm during the past week, as the June Non-farm payrolls report showed a meager 18,000 jobs were created last month. If that was not bad enough, the figures for May were revised downward to show an increase of only 25,000 jobs. The unemployment rate rose to 9.2%, which is the highest level seen so far in 2011. The private workforce climbed by 57,000 jobs in June, vs. 73,000 jobs created in May. Government employment continued to decline, with 39,000 jobs lost in June, as budget concerns at the state and local government level have pared public sector employment for the 8th straight month. Equity futures fell sharply after the report was released, likely resulting from optimism about yesterday's better than expected ADP private sector employment figures as well as a larger than expected decline in Jobless claims last week. Continued uncertainty regarding the government's inaction on the debt ceiling as well as concerns about consumers' reluctance to spend has businesses hesitant to hire new workers. One does have to wonder why the large discrepancy between the ADP figures and that from the Labor Department, with some economists blaming a seasonal adjustment (to account for summer job hiring) for the overly negative report. However, other aspects in the report, such as a drop in average hours worked and average hourly earnings, would be hard to explain away. Not just equity prices fell after the employment report; Oil prices also fell by over 2%, as traders' concerns about the economic recovery heightened concerns about global Oil demand. Ironically, Gold prices rallied despite a rising US Dollar, which may be a sign that Gold is holding its status as a "safe haven" investment.



  Technical Notes

Looking at the daily chart for the September E-mini S&P 500 futures, we notice prices rising to new intermediate highs before falling sharply. Only a last 30-minute rally kept prices from forming an "outside day "reversal. Volume was also relatively light on the recent rally, which may also have some traders questioning the validity of the up-move. The 14-day RSI has started to move lower, with a current reading of 59.81. Support for the September E-mini S&P 500 is seen at the 20-day moving average, currently near the 1294.50 level, with resistance seen at Friday's high of 1354.50.


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