Of the 10 chain stores that still report monthly sales figures, most reported weaker year-on-year sales growth in November than October. Challenger says that there were 45,314 lay-off announcements in November, a monthly figure that is close to two-year highs. The financial sector leads with the highest number of lay-offs as a smaller number of foreclosures has reduced staffing levels. Q3 GDP was revised up to 3.6% from 2.8% thanks to a surge in inventory levels. Weekly jobless claims dropped to 298,000, its lowest since September and the second lowest since 2008. The Commerce Dept. says that Q3 corporate profits rose 5.8% versus 5.3% in Q2. The government also says that factory orders dropped 0.9% in October. Bloomberg’s weekly Consumer Comfort Index rose to -31.3, the least gloomy reading to begin a holiday season since 2007. 10-Year Notes yields rose to 2.867% and many traders think it is only a matter of time before they have a 3 handle. This week’s better than expected jobs data has increased the odds that the Fed will begin reducing its asset purchases sooner rather than later. Large-cap stock indices were under pressure all day and finished near session lows.
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Near-term market direction likely depends on Friday’s jobs report. We’re in a good news is bad news market, so a jobs number that approaches 250,000 would likely send stocks lower (at least initially) while a number below 180,000 would rule out any taper in December. Technically, we look for 1773 support to hold before the December S&P 500’s trend higher resumes. If 1773 breaks on a closing basis, then we would look for a slightly deeper correction to the 50-day moving average near 1740. To get below the 1727 (September high)/1740 support area, the market will probably need a new catalyst, such as a stronger than expected November jobs report. Resistance remains 1823-1836. At lower volatility levels, Altavest strongly recommends taking profits on previously sold put positions and adding some long put and call spread exposure (long strangles). When you buy long options in a low volatility environment, we recommend buying short-dated near-the-money expirations, particularly ahead of key economic reports or FOMC announcements. If you prefer only selling option spreads, we recommend long-dated option spreads versus short-dated spreads. Please consult your Altavest broker with any questions.
5:30 AM PT – Employment Situation
5:30 AM PT – Personal Income and Outlays
6:55 AM PT – Consumer Sentiment
12:00 PM PT – Consumer Credit