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Market Volatility Bulletin: Jobs Number Impresses

The Balance of Trade profile picture
The Balance of Trade


  • Equities are up on the positive jobs report; commodities are having a rough morning.
  • A question for readers about divergence in near vs. far-dated contango.
  • Trade wrap up on our Tracking the Trade segment.

CNBC: 11:06 EST

The response to today's positive jobs number has been fairly muted. Buyers of US equities (SPY, DIA, QQQ, IWM) have tried rebounding off yesterday's lows, but with limited success so far - most notably the Dow. The reality is that while the number was strong, it wasn't that far away from expectations. The 14k increase from last month's doozy of a miss was to our minds more meaningful.

Commodities generally are getting a whipping this morning. Silver is trading at 52-week lows. The markets have summarily wiped away crude's big rally from last week. Oil appears soft, and that may impact forward guidance on upcoming earnings calls.

The dollar has gotten a boost over the last couple hours. As a counterbalance, Q2's dollar weakness may offer earnings guidance a tailwind to offset softness in commodities.

Sector SPDRs: Jul 6

Yesterday saw markdowns for all ten S&P sectors. While weakness in Tech has been a common reason for SPY spills of late, movement in XLK was not a particular "hot spot" for yesterday's losses.


Today's Shout-Out goes to Charlie Bilello's piece entitled Tall Tales and Transports.

The piece is brief. Mr. Bilello methodically debunks the reasonably famous notion that 52-week highs in transports means strong performance for the overall market (the S&P 500 index).

Mr. Bilello's piece is particularly worthwhile because the transportation index just hit an all-time high on Wednesday. He warns, however, that rather than seeing a large tailwind for equities, an outcome such as July 2011 is certainly possible also:

The reader is treated to simple charts that compare today's "set up" against 2011, 2008, and early 2001… all where new highs on the part of the transportation stocks were followed up by large declines in the broader indices, and the transports themselves for that matter.

This article was written by

The Balance of Trade profile picture
Adam Zingg, CFA offers both practical and theoretical perspectives that will benefit readers who wish to learn more about how to execute  on views or strategies that interest them.  Whatever your overarching philosophy or expertise, I believe there is value in understanding how trading works. This is perhaps especially true for investors, who often take a more philosophical, less mechanical view when it comes to their processes. It is not my goal to:1) convince you which side of the market to be on2) establish your trading time frames3) have you directly follow any specific trade ideasInstead, I aim to demonstrate how complicated sounding ideas can be simplified and accessible.  My hope is to grow your tool kit of resources, and give you healthy confidence to execute your own personalized strategy.  Trading and investment are fascinating, applicable across a wide variety of fields and disciplines.  Greater focus on targeting, execution, and exit strategies build transferable life skills.  In reading my work, it is my goal that you will consistently glean useful insights and build skills that enhance your ability to trade and make important decisions.

Analyst’s Disclosure: I am/we are short SPY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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