Hurricanes and strikes contributed to the weak number.

PRE-OPEN MARKET COMMENTS FRIDAY – This has been a busy week for economic and earnings releases and they will impact market direction into year end.

Earnings season is hitting stride and we’ve heard from mega cap tech companies. The reaction has been neutral to slightly bearish. TSLA, GOOG and AMZN were up and AAPL, MSFT and META were down. The results were good with most firms beating estimates, but the reaction is really all that matters. From a bullish standpoint, we needed to see strength in tech. Without this sector, the market will have a difficult time breaking out to a new all-time high. Shorts will be embolden now that the numbers are out. Ahead of the numbers they tend to be passive since these stocks have been leading the market higher for years.

The economic news has been pretty good. Our first look at Q3 GDP was just shy of expectations (2.8 vs 3.0). Inflation is not where the Fed would like it. The core PCE came in at .3% and they would like to see it at .2%. The jobs report this morning was bearish in my opinion. Only 12K jobs were created during the month of October and that is much lower than the 100K that was expected. Hurricanes and strikes are to blame and they could have accounted for 100K jobs. These are temporary events, but if you add that back, 112K jobs is still not a strong number. We need to be in the 150K – 200K range. Furthermore, hourly wages increased by .4%. That the largest cost for companies and it is inflationary.

So far the market has been able to shoulder the news. Fed Funds futures are pricing in additional rate cuts and the FOMC statement is next Thursday.

I thought we had a chance to rally this week on good earnings reactions, stable economic releases and seasonal strength. I have starter swing longs on and I will be looking to exit them into strength. I’m not bearish, I just did not get the move I was looking for this week. I wanted to see the market through the all-time high this week in order to hold the positions into the election next week. If I did not have that cushion, I planed to exit.

I’m not nearly as bullish when economic conditions are soft even if the Fed is easing. That is a very slippery slope and the market is constantly looking for its next “fix” (rate cut). I felt the market was technically poised to breakout and that did not happen.

What would get me bullish? Technically, we would need to erase the long red candle from yesterday in the next two days. Much of that would need to come today. We would need to close above AVWAPQ and make a new all-time high a week from now on good volume. The drop yesterday tested the 50-day MA and that will attract some shorts. When they cover that will create some buying pressure.

What would get me more bearish? A failure to make a new high for the year next week with a lower high and a close below the 50-day MA on heavy volume.

To recap, I am going to exit starter swing longs into strength and if we struggle to recapture AVWAPQ in the next two days, I will start exiting. I did not like the reaction to the news this week and the jobs report is concerning.

From a day trading perspective, I would be very careful with longs this morning. I feel that the chances of a gap reversal are pretty high. VIX/VXX jumped yesterday and that is a bearish sign. Keep a very close eye on it today. It needs to back off right away and I doubt it will.

Support is at the 50-day MA and resistance is at AVWAPQ.