#MACRO: $SPX, #JOBS

#STOCKS: $AMZN, $MSFT, $ADBE

MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN MSFT & AMZN, LONG-TERM

Stocks finished little changed today. The trading range was quite wide, but for now, the S&P 500 remains near the zero gamma level for the most part. Tomorrow’s jobs report is expected to break the stalemate, regardless of the outcome.

Jobs Report: What to Expect

Between April 2022 and March 2024, the BLS missed analysts’ estimates only three times. However, since April, the BLS has fallen short of estimates three times. This suggests that something may have changed.

For September, analysts expect 150,000 jobs to be reported. Will it come up short or surprise to the upside? Who knows? It could be a random number pulled out of thin air. What probably matters more at this point are the August numbers and any revisions, as the actual non-farm payroll numbers will likely see a significant revision as usual.

Key Job Revisions to Watch

The more significant issue might be the 2-month net revisions, expected to show a decline of 86,000 jobs. Given how frequently it has been revised, that figure may carry more weight now than the headline non-farm payroll number. Additionally, there’s a good chance the unemployment rate will rise above the expected 4.2% tomorrow.

One reason for this is the ratio of entrants into the labor force compared to the number of open jobs has fallen significantly. At one point, there were nearly five jobs for every new entrant; today, it’s down to 2.8.

Stock Market Reactions

This could contribute to a rising unemployment rate, as the labor market may no longer be able to absorb population growth as quickly as it has in the past. Additionally, the market has been relatively complacent, focusing primarily on job losses as seen in claims data.

Today, we saw a last-minute rally into the close, and it’s not unusual for those gains to be returned the next day. This suggests the S&P 500 could gap lower at the open tomorrow, and if it breaks below the 5,675 level, we might have our first real chance of the index filling the gap at 5,620, which has been open since the Fed meeting.

Nvidia’s Market Impact

It’s worth noting that Nvidia accounted for 115% of the gains in the Bloomberg 500 today. In other words, if Nvidia had been flat, the index would have performed more like the RSP ETF, which was down about 50 basis points.

Stock Specific Trends: Amazon, Microsoft, Adobe

I have to say, it’s hard for me to imagine the S&P 500 going higher with Amazon’s stock looking the way it does. My one concern is that it’s not a diamond pattern forming on the chart because that wouldn’t be good news, especially since I’ve owned the stock for so long.

Microsoft isn’t looking great either at the moment. It’s easy to argue that a bear pennant has formed in the stock, but the more critical level is around $380. That’s the neckline of a potential head-and-shoulders pattern, which could be a concerning sign for the stock’s future direction.

Right now, Adobe is sitting on support at $500. A break of this support could lead to a gap fill at $475. While there’s also a gap to fill at $565, that currently seems like a more challenging move compared to the drop to $475, given the stock’s current position and momentum.

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