Yesterday morning we got the September jobs report which came in much weaker than expected as the economy added just 29,000 jobs vs the estimate of +84,000. The unemployment rate also ticked up to 4.2% while it was expected to remain unchanged at 4.1%. While this was a bad jobs report, markets rallied on it because the Fed is less likely to continue raising rates if the labor market weakens. The 10 year yield initially fell on this jobs report but rallied back to finish positive for the day and near highs. However, odds of a rate hike in October did decrease and odds now favor the Fed keeping rates unchanged with about a 78% chance.
Tech led again on Friday with the Nasdaq hitting a new all time high, closing up 1.19%. The Russell 2000 also jumped 0.94% while the S&P added 0.73%. Markets did fade off of the highs of day and it wasn't a particularly strong finish for the day. But with the rally, the VIX closed down 6.5% at $15.31.
For Monday, nothing changes on a daily time frame for the Nasdaq as it continues to trade within its big primary daily uptrend (white). This primary uptrend will continue to be the only resistance level to watch around 27,825. It will also be the first support to watch on a pullback from the bottom end of the range around 26,600. If it breaks through it, there will be more support just below it from its prior downtrend (blue) at 26,525-26,550.
The S&P gapped and closed above its previous primary downtrend, starting a new primary uptrend (white). However, it was a weak finish and it will likely open below this new primary uptrend which will be at 7,785-7,790 and is about 0.80% away. If it can get this big gap above the 7,785-7,790 level on Monday, then it will act as support, and the last 2 resistances to watch on another rally will be at 7,800-7,810 (green and teal).
On a pullback, the first key support to watch will be at 7,720 (purple) which is just below Friday's close of 7,722.72. If it were to gap below 7,720, then this level would become resistance. After that, the next supports will be at 7,684 (teal), 7,677 (green), 7,659-7,660 (red), and 7,650 (bottom of the purple range).
The Russell 2000 continues to trade within its big primary downtrend so it doesn't start any new daily ranges for Monday. This will continue to be the only level to watch for now with resistance at about 2,885 from the top of the range and support at 2,700-2,705 from the bottom of the range. At this point, since the top of the range is much closer than the bottom (1.8% vs 4.6%), it is more likely that it makes a run to the top of the range - or at least continues to chop as resistance comes down. Eventually it will start a new trend, and it's more likely to break the top of the range.
