Daily Commentary: February 07, 2025

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Market Yawns After Jobs Report

Posted by Pete Stolcers on February 07
www.oneoption.com

The market is going to stay in the range and wait for the next catalyst.

PRE-OPEN MARKET COMMENTS FRIDAY – The market has been trading in a horizontal range and a very large news cycle just passed without incident. This will embolden buyers.

The jobs report came in a little light today, but when you factor in upward revisions of 100K in the last two months, it was actually pretty strong. The one concern is that hourly wages increased .5%. That is inflationary and it will keep the Fed sidelined. This is the largest input cost for companies.

AMZN reported earnings and the stock is right where it was a couple of weeks ago. There is not much net change. All of the mega cap tech stocks have reported earnings. In general, they were good enough to support lofty forward P/Es, but not good enough to spark a market breakout.

I don’t like the macro economic backdrop. I can see it deteriorating gradually in the US and at a more accelerated pace globally. Bull markets die hard and there has simply not been enough bad news to spark profit taking. At this juncture, the market could breakout on light volume and it could float higher. If that happens, I am perfectly happy letting it go. I feel that the higher it runs, the better the short will be when it eventually sets up. Keep your risk exposure light and focus on day trading. The issue with this backdrop is that it will lull you to sleep. You will start to ignore the warning signs and you will join the breakout because you’ve been waiting for signs of selling pressure and they have not materialized. You are anxious and you do not want to miss the breakout.

The big numbers next week are CPI and PPI.

Earnings season will still be fairly busy next week, but most of the big companies have reported.

I am going to stay focused on day trading. My favorite set up today would be a wimpy grind higher that gets smacked down when it gets close to the all-time high. I would short that scenario and I want bulls to get lured in.

Support is at the low from Thursday and resistance is $610.

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