Daily Commentary: March 08, 2024

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Here’s the Key To the Jobs Report

Posted by Pete Stolcers on March 08

This was an excellent number all the way around. People have jobs and the economy is strong. The hourly wage component was of greatest interest to me and here’s why.

PRE-OPEN MARKET COMMENTS FRIDAY – This morning we got the jobs report. Hourly wages came in at .1% and they were revised down to .5% last month. In my opinion this was the biggest component of the report and it is good news for inflation. States increased minimum wages on January 1 and that is why I believe it spiked. Wages are the largest input cost for companies and they pass those costs on to consumers. In February, 275K new jobs were created. That is consistent with the low initial jobless claims numbers the last four weeks.

People have jobs and the economy is strong. The Fed won’t cut until this summer and we don’t need them to. Don’t listen to the “good news is bad news” crowd. This is a good number for the market and the futures are up after the news.

There has been a pattern this year where the market grinds higher towards the end of the week and then it spends the first part of the next week establishing support. We are at a new all-time high and I am expecting a strong day today.

Some people will read this previous statement and preach to others six months from now, “Pete said we should always buy in the middle of the week because the market always rallies into the weekend.” You think I’m kidding, but I’m not. I communicate clearly. People hear what they want to hear. I used to be shocked at how wildly people can misinterpret what I actually say, but not anymore. This is a short-term pattern. I am aware of it and I am bringing it to your attention. Patterns like this change all the time.

I hate chasing gaps up to a new all-time high. I suspect this one is going to hold. Overseas markets were up marginally. 1OP is going to start off on a bullish cycle. The bigger the initial gap up is this morning, the less room it will have to run during the day. The bigger the initial gap up is this morning, the more room it has to reverse and the more severe the bid check will be. When the market surges higher and we have a gap and go, much of the move is exhausted in the first 90 minutes. By the time we confirm that this is going to be a gap and go and not a gap reversal, most of the move has happened. There is typically a mid-day bid check during a gap and go. Buying that dip will still produce nice profits and then we will have confirmation of the gap and go.

“FOMO Joe” is frothing at the mouth. He can’t wait to buy this morning. He is not someone I like to join. If you are extremely confident that this is going to be a gap and go, scale in gradually and take small starter positions early. I do believe this is the most likely scenario today.

The more prudent play and the one I suggest is to wait. See if the gap is going to hold. If we get a reversal, you will be glad you did. Even a small dip or a compression will provide you with a much better entry point. Option IVs are always higher early in the day and the bid/ask will be wider. Be ready to stay sidelined if there are long green candles. Know that if you miss the initial move higher, you will get a nice opportunity to buy a dip later in the day. Then you will also know which stocks you want to trade. If we start stacking smaller green candles and the initial move is less than 15 S&P 500 points, you can gradually add and not feel like you are chasing.

Support is the high from Thursday and resistance is at $520.

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