Jobless Claims Put Buyers to Work

Markets enjoyed the day as buyers were willing to step in on positive news from the jobless claims falling 20k to 331,000 last week. The unexpected positive helped push stocks higher at the open. Economic data has been mixed on the week, but the overall outlook it has been good enough to keep the buyers interest. Tomorrow the jobs report for January will hit the tape before the open and is likely to set the tone for the trading day. Watch the pre-market for how it sets up and if the mood is to give back today’s gains or add to the upside move.

The estimates are for 190,000 new jobs to be added in January. After the ugly results in December many analyst are talking about a snap-back and push to the upside in hiring. Many hope that is true and will add confidence back to the equity markets short term. Worries over this and other issue have put the major indexes in a hole to start the year. The weather is likely to get the blame if the numbers are bad, at least it has gotten the blame in all the other bad reports, i.e. ISM manufacturing data. The rate of unemployment is expected to fall to 6.6% as well, but we all know that is not the real rate of unemployment or under-employment. The participation rate has decline to 62.5% and stands at a 35 year low. Thus, the lower unemployment rate. Wage have been flat and that will be of importance in the data as well. If the number overall disappoints the markets will react on the heals Thursday’s gains. Better numbers and the bounce from Thursday will continue.

Disney did its part Thursday to keep the upside moving with a  positive earnings report pushing the stock up more than 5% on Thursday. Expedia (EXPE) is part of this sector as well and after-hours reported better than expected earnings results which has the stock trading 10% higher after-hours. They are part of the leisure sector (PEJ) which was up 2.3% on the day and establishing a reversal low on the chart. A move above $32.60 would be of interest going forward in the ETF.

Linkedin was under pressure after-hours trading down nearly 8% on earnings report. The challenge for investors was related to their forward guidance. This has been the issue with plenty of stock during this earnings period and it has kept the market in check overall.  They are part of the social media sector (SOCL, created for the sector) and it is in a consolidation pattern related to the current uncertainty and pressure in the technology sector. This could downside pressure on the ETF and a test of the $20 support level near term. How it responds at support will determine how to trade the sector going forward.

Emerging market bounce back 2.1% on Thursday, but remain near the lows. EEM closed at $38.51 on the day and a move beyond this level on volume would be of interest looking forward. The sector is technically in oversold territory and just about everything negative that can be said has been stated. Thus, with the negative sentiment in place we could see a push back near the $40 mark as a relief bounce. Could be worth a short term trade on the move if it follows through.

Energy (XLE) is another sector that technically is oversold and is attempting to find some support at the $82 level. A move above the 200 DMA would offer a trading opportunity and the oil services (OIH) sector is one to watch on the upside move. Oil was up 0.6%, natural gas (UNG) tested support again at the $24 mark and the balance of the energy commodities remain positive. Watch for follow through on the bottom being put in for energy.

Plenty to like about the trading on Thursday. Volume was better on the buying, the sellers never attempted to take back control on the day, and the volatility dropped big to 17.2. The key will be the jobs report and the investor response. A bad number will likely motivate the sellers and a good number may motivate the buyers. It promises to be interesting as investors choose sides on the outcome of the economic data.