Employment Data Leads Busy Calendar

 |  Includes: DIA, QQQ, SPY
by: optionMONSTER

Today will be the economic calendar's busiest day for the week. We will get our first look at employment data in the form of job cuts and the ADP employment numbers.

The MBA Purchase Applications data will come out at 7 a.m. ET. I also only look at the purchases component of the mortgage report because it indicates fresh economic activity as opposed to refinancing. There are no estimates made for this release, but last week purchases came in at 176.7. A reading higher than 176.7 by 5 percent or more would be bullish; a number lower by the same margin would be bearish.

The Challenger Job-Cut Report will be released at 7:30 a.m. ET. This report tracks job cuts that have been announced but not yet implemented, leading many traders to consider it a leading indicator of employment trends. There is no forecast made for the report, but last month's cuts came in at 41,400. A number at or above 50,000 would be bearish, while one at or below 40,000 may be seen as normal or bullish depending on how far below it comes in.

The big report of the morning will be the ADP Employment Report at 8:15 a.m. ET. Consensus calls for 100,000 private payrolls to have been added, from forecasts ranging from a bearish 56,000 to a bullish 150,000. Traders tend to interpret this number as a corollary to the government's Employment Situation Report on Friday, but that proved to be a very wrong assumption last month.

Factory Orders will be released at 10 a.m. ET. Consensus calls for orders to have dropped by -0.7 percent. Estimates range from an even more bearish -1.8 percent to a bullish gain of 1.1 percent. The latter would be an extreme positive surprise for markets conditioned now to gloomy news.

Also at 10 a.m. ET, we will see the ISM Non-Manufacturing data released. The index is expected to come in virtually flat against the prior month at 53.5. The forecast range is from a more bearish drop down to 52, to a large bullish increase to 57.1.

The EIA Petroleum Status Report will be released at 10:30 a.m. ET. Before the EIA data comes out, the American Petroleum Institute issues a competing report based on its own supply data.

The forecast for both reports was for a build of 0.9 million barrels. But the API release, which came out last night after the market closed, showed a draw of -3.314 million barrels instead.

If the EIA data confirms this draw or shows an even larger one, it could be bullish for crude. If instead the draw number is smaller than the API's -3.314 million barrels, or is a positive number indicating a build, it could be bearish for crude.

The EIA is a government body, and the API is a private industry group. The two reports do not always agree either in terms of amount or direction.