The jobs reports all hit the news right on schedule an hour before the open at 8:30am ET, and were followed about an hour later by the Michigan Sentiment report, which came in less than expected.
08:30 Average Workweek 33.7 vs 33.8 consensus
08:30 Nonfarm Payrolls 146K vs 200K consensus
08:30 Unemployment Rate +5.2% vs +5.4% consensus
09:47 Michigan Sentiment- rev 95.5 vs 96.0 consensus
Here was the report I got early in the session:
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(Dow +7, Nasdaq +2, S&P +1.05)
Little enthusiasm at the open as the market opens with a tinge of caution following weaker than expected payrolls data... While a rise of 146K in Jan non-farm payrolls was disappointing versus expectations of 200K, and below an average gain of 177K over the four prior months, the data were not too bad to drastically threaten consumer spending, as hiring is clearly taking place just not at a robust rate... The average gain of 177K also represents an annualized gain of 1.6% which, in addition to an increase of about 1 1/2-2.0% in productivity, remains consistent with real GDP growth of 3.0-3 1/2%... Lower yields in the benchmark 10-year note, up 20 ticks to yield 4.08%, have also provided a floor of early support for the market.
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Here was the report I got at 10 am ET, after the market had surged higher. I notice the rally began precisely at 9:45am, but I think that was coincidental. I can't imagine it was sparked by the uninspiring Michigan Consumer Sentiment Index:
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The Jan Michigan Consumer Sentiment Index has just checked in at 95.5, roughly in line with expectations of 96.0, but off 1.6 points (-1.6%) from the Dec level after the 6% two month rise over Nov and Dec... The index, however, which serves as a better indicator of consumer mood than buying habits, continues to trend modestly higher, as it has stood above the 92.1 average since 1990.
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Before the reports, the Nasdaq futures were trading moderately up, about +3 compared to fair value. Immediately after the news, they dipped reversed and dipped to about -4.5 compared to fair value 15 minutes before the open, then began moving higher.
139.142.147.22
The story about the tobacco court decision came through the wires at 14:05 ET. The market opened flat and suddenly began to rally about 15 minutes into the session, long before the tobacco news hit the wires. There was no reaction following the legal announcement at all (actually, the market traded down somewhat during this time). About an hour later there was a rally into the close.
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So obviously, the tobacco ruling nothing to do with anything.
....uh, unlesss you happened to own shares of MO or something:
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But interestingly, compare the action in the chart above to that of the Dow after 2pm:
139.142.147.22
Now MO is, of course, a component of the Dow:
finance.yahoo.com^DJI
So the court decision hit at 2:05pm ET, and caused an immediate gap up in MO, but had no affect on the DJIA, which actually traded down between 2pm and 3pm ET, just like QQQQ.
Once again, I think the inescapable conclusion is that the tobacco ruling had no real effect on the general market at all.
I think we can also conclude from the futures action and the flat open at 9:30 am ET that the jobs reports were not the catalyst for the rally either, otherwise the futures would have rallied, and the markets would have gapped up.
My conclusion is this is a classic bull trap, and all that bullishness will evaporate early next week, probably Monday. I suspect there will be "follow-through" that is virtually all driven by filling of retail buy orders accumulating over the weekend; retailers are the only ones affected by BS news stories crowing about things like the great tobacco decision and the good news coming from the jobs reports and such. Then, the professionals, lying in wait, will take control. That might be late in the session Monday, or it might be Tuesday, but either way I think it will occur as QQQQ tries to invade the zone of heavy resistance above $38. Retail buying will never power QQQQ through that area of strong resistance, and the professionals know that, and will position themselves accordingly (i.e., short). I think at that point The MMs and specialists and professional traders will begin walking everything downwards. Retail panic selling will set in, fueling the resumption of the medium-term correction.
The only thing that could change this scenario is, as always, big news. Not like the "news" from the jobs reports or tobacco, it will have to be far more substantial than that, IMHO.
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