Daily Commentary: June 05, 2025

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Weak Job Report Likely

Posted by Pete Stolcers on June 05
www.oneoption.com

Traders have been waiting for a weak jobs report and we might get it tomorrow.

PRE-OPEN MARKET COMMENTS THURSDAY – The economic warning signs have been building for months, but the job market has remained stable. This has allowed the Fed to maintain its hawkish stance. That could change Friday.

This morning Initial Jobless Claims hit 247K and that is the highest level we’ve seen this year. It has gradually been ticking higher. ADP showed that only 37K jobs were created in the private sector during the month of May and that was well below the 111K that was expected. The Fed released its Beige Book yesterday and it showed slowing job growth during the last six weeks. All of this is consistent with a drop in ISM Manufacturing and ISM Services this week. Both are in contraction territory.

The market has been able to shoulder “body blows” during the last few weeks, but they will eventually take their toll. The bid has been strong and buyers are engaged. In the early stages of an economic decline, bulls will remain steadfast and they will lean on the notion that Fed easing will save the day.

From my perspective, the fundamentals are deteriorating and the technicals remain bullish. This is a time to tread cautiously. I believe that in coming weeks the bid will start to soften. “The Big Beautiful Bill” and tax cuts could be an upside catalyst in the next few weeks, but after that I believe the bullish drivers will have run their course and reality will set in.

Global economic conditions are weakening and will continue regardless of the tariffs. Interest rates are rising when activity is declining and that is not a healthy backdrop. Credit risk is elevated and the appetite for bonds has been low.

I am biding my time and I am focusing on day trading. I do believe that surprise favors the downside overnight and I might take a few short positions into the jobs report. Overseas markets were up marginally. Look for a fairly dull day ahead of the jobs report. I am seeing a nice “pop”. It appears that Xi and Trump had a call. That is a step in the right direction, but I’m not expecting any details.

Support is at SPY $595 and resistance is at $598.

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