July 1, 2020

STOCKS – LULU, PFE, MCD, FCX

MACRO – SPY, QQQ

Mike Reading The Markets Premium Content – $35/Month or $300/Year

• Testing Resistance/Reducing Tesla -Midday
• Waiting For More Data – Morning
• Gap Filled, Resume The Previous Trend?
• The Rest Of The Week Could Be Tough
• The Fed’s Falling Balance Sheet Could Spell Trouble
• RISK IS BUILDING- MIDDAY
• Facebook Is The Key Today’s Market – Morning
• THE WEEK OF JUNE 29 WILL BE CHALLENGING

Stocks are rising ahead of the employment report today and given the importance of this report. It seems that pre-market action will likely not matter much. The estimates are for 3 million jobs to have been created in June. That seems like a high hurdle, but what do I know. Last month was a major blow out. 

So there are a few things to watch for in this report, that could create some confusion. Remember, two different surveys come across on the headlines. The non-farm payroll is a separate survey from the unemployment rate survey. So we will be looking for any revision from last month up or down. Remember last month nearly 5 million workers were misclassified on the unemployment survey. So there is a very good chance for a revision downward.

Additionally, we will want to watch the initial jobless claims today as well, which also comes at 8:30.

So could we see a blow out job report, a lower unemployment rate, and higher continuing claims, and the market go lower? Yes. Could we see miss on the job report, higher unemployment, falling claims, and the market go higher? Yes. It will depend entirely on what the market views as the most important headline.

S&P 500 (SPY) 

Traders appear to be wasting no time, trying to jump ahead of the report with the SPY already trading higher by 70 bps. If this holds throughout the day, and we close above the downtrend at around $310, it would be a big win with the next level of resistance at $314. The $314 level may be a challenge; remember we failed there several times before moving down to $300. 

It has become increasingly confusing to determine what the driving force behind the market is these days. The latest news around the virus seems to be getting worse, and many states are tightening up their restriction, but yet markets have remained immune to this. I’m not sure if the market is merely ignoring the news, or if it is betting, it will get more stimulus to bridge the gap.  It seems like a significant game of risk. 

NASDAQ 100 (QQQ)

Meanwhile, the Qs remain in their near-perfect trading pattern. It is somewhat surprising.

Pfizer (PFE)

Pfizer jumped sharply yesterday on Vaccine hopes, so let’s see if it can get past resistance now at $34.90.

McDonald’s (MCD)

McDonald’s is trading down some today, less than I would think, given the news they would be pausing their reopening. I guess having sales do not matter anymore? It would seem all is well as long as $178.50 hold. 

Freeport (FCX)

Freeport still has some further to higher it seems, with that gap to fill up at $12.05. 

Lululemon (LULU)

Lululemon is once again towards the upper end of its range. I don’t understand the move to buy Mirror. Is this an athletic apparel maker or something else? Is this “diversification” meant to be a real growth driver, or merely a distraction? The $311 area is a critical region. If it can’t push higher and makes a lower higher, it seems to suggest a change in trend. 

-mike

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