Dominating the headlines today will undoubtedly be the unemployment report for September, but instead of focusing on the data, we’re going to be watching the dollar and the VIX closely. When the dollar and VIX go down, it is seen as bullish for equity prices, conversely, when they rise, it is seen as bearish. Well right now the two of them are at key support levels for their recently established bullish trends, and how they react at current levels will likely be a leading indicator for the overall markets.
The dollar closed Thursday at $78.63, right above a key support zone. The $78-$78.50 range represents key trendline support for the dollar which was established by a series of higher lows starting in mid September. While a breakdown below $78 won’t discredit the recent breakout by the dollar (base support remains around $76) it will almost certainly lead to a steeper pullback. As for the VIX, it closed Thursday at 36.27. The VIX hasn’t closed below its 50 day simple moving average since July, and that average is close by at 35.64. Should the VIX breakdown below the 50 day sma, it will set up a test of its most recent low at 35.32. A breakdown beneath both of these levels would likely support the case for higher stock prices in the near term.
Turning to the data in focus, all eyes will be on the Labor Department’s nonfarm payrolls report for September. After posting a goose egg in the jobs created department for August, the markets might get very scared by a negative number. However, due to the extreme nervousness surrounding the report, we wouldn’t be surprised if even a pathetic number (say only 40,000 jobs created) gets celebrated, let alone an increase of 100-200k jobs created. Also being reported are wholesale inventories and consumer credit for August. As usual, keep an ear open for new developments out of Europe as there seems to be new news daily.
Did you know that you can watch Stockhaven trade live in real time?
Learn how to daytrade by watching someone else trade! Watchhimtrade.com is the only site that lets you look over the shoulder of a professional daytrader.
Watch this video now where he shows you how it’s possible to make 100% in just 5 minutes!