Perhaps traders, at least the ones from NYC, are in such a happy mood that the Yanks won the World Series for 27th time, that they couldn't help but celebrate more by bidding up stocks. More likely, it was Phillies running out the door short covering before the NFP# upside risk. No matter how you look at today's action, it was nearly flawless. We started strong and kept at it and closed at the high. All of the groups are showing some healthy gains and even the financials picked up (+2%) the pace in the afternoon to make a possible close at a crucial point in our view ~1067/ ~1063ES.
As forecasted last night, we could easily make another move up into NFP# and even make it all back (sell off) with some help from eco’ data. Well, we even got an unexpected ‘productivity data point’ to make Wednesday's sell off disappear and even more. Add the positive earning report CSCO and kaboom. The action is also an indication that people are anticipating a good job report tomorrow, but the reaction to the combination of the Jobs loss and unemployment rate is a guessing game and we can’t even begin to forecast the reaction. This is like playing the Daily Double at the track…what combo’ may be the winner? What if rate one is good and the other worse than expected. This time both numbers are important. At this point, people are anticipating a very good report with their voting already done the day before. More importantly, we like how positively this market has been behaving ever since we started the slide two weeks ago. If this is the best/most bears can do to damage this market, then they are the ones who'll need mercy sooner than later.
Technically, we are back near the previous support of SPX 1067, a close over this level almost puts the Bull in charge. Getting over 1075 breakdown levels and 1100 is in the cards year end.
As far as plays go, everything enjoyed a healthy day. FSYS and MELI, are two plays that came out with earnings/guidance that beat the expectation and got a strong reaction by the traders. Justified or not, these two have always been interesting plays for traders. We are keeping them on our list to see if there are trading opportunities down the road.
One possibility not discussed is nothing really happens tomorrow after all the volatility and we get a ’flat’ reaction/ close on Friday. Why? Since the FOMC decision eyes may have switched to BEN and his speeches on the 16th to get a better read on the FOMC statement. Before, we have a G20 meeting/letter this weekend that may play a part next week as it may have USD implications and therefore the markets. This 'exhaustive' outcome would be best of course!