Daily Commentary: April 03, 2024

Auto Post1Option Commentary

Jobs Are Bad For the Market

Posted by Pete Stolcers on April 03

ADP reported that 184,000 new jobs were created in the private sector in March. Why is the market down?

PRE-OPEN MARKET COMMENTS WEDNESDAY – Don’t believe what you read. Good news is good news.

“The market has had its largest losing streak of the year.” “Mutual fund outflows reached $40 billion in March.” “We are going to see tax selling in April”. “Corporate buybacks have slowed down.” “Bullish sentiment is very high.” “The VIX is extremely low and no one is expecting a pullback.” “The Fed is not going to cut rates and bonds are selling off.” “The war in the Ukraine is not going well.” “There was an earthquake in Taiwan and that could impact chip supplies.” These are the headlines and not one of them will have a market impact. They are casting doubt and you are afraid.


This is just a normal soft patch. You have to ignore all of this bullshit. Buy the dip once the market establishes support. You can even sell some bullish put spreads now. The market does not rally in a straight line, it has dips and cycles.

The major news outlets are nothing more than cheerleaders. They like to report bad news because it “sells”. Which ever way the wind blows, that is what they report. They are not forecasting price so what they report is worthless. Turn that shit off.

We wanted a dip and now we are getting one. This is what we needed. The depth and duration of this dip is going to tell us how aggressive buyers are and it will help us determine how much higher we are going to go. This is no time to get “cold feet”. Right now I hear, “Maybe Pete’s wrong this time. I think I am going to play it safe.” A month from now I will hear, “Of course, everybody could see that this was just a normal pullback in a bull market. Pete’s no genius.” I’m not a genius, I am telling you to focus on the price action and to ignore all of the idiots who are trying to make you doubt the strength of this rally. If you listen to them, they will derail your trading.

We want strong jobs and strong economic growth – PERIOD! The numbers will be good all week. When people have jobs they spend money and they pay off credit cards. That is good for profits. Initial jobless claims have been low and Friday’s number will be strong.

Institutions got it wrong… again. The Fed is not going to cut rates and the economy is not going into a recession. The chance for a rate cut is being pushed back and institutions are having to sell bonds because rates are going to stay “higher for longer”. As long as economic growth remains strong, the Fed does not have to cut rates. My biggest concern is that at some point growth does slow. Is the market going to tank when that happens? No! The “bad news is good news” crowd will rejoice initially because the Fed will consider cutting rates. That will prop the market up for a while and we will have plenty of time to exit longs if growth slows rapidly.

This market pullback is going to run its course in the next day or two. I believe we could see a nice rally on the jobs number Friday. Set your alerts on strong stocks and be ready to fire. Watch for signs of support. I would like to see AVWAPQ hold the next two days. That will give us a nice launching pad. We might be pretty dull until then.

The low and the high from Tuesday are support and resistance respectively. From a bullish standpoint, I would like to see this early dip erased immediately and I would like to race into the gap from yesterday in the first two hours of trading. We might not get that. If the market continues to struggle, stay sidelined and keep your powder dry for the bounce.

Live Trading

Open an Account

Paper Trading