😳 Is a Snap-Back Coming?
Welcome back to the Rude Awakening for Thursday, April 8, 2021.
We just got the jobs report this morning, and it turns out they were a surprise—in a bad way.
Yahoo Finance reports:
New weekly jobless claims unexpectedly held above 700,000 last week to extend a rise from late March, despite other signs that rehiring has been taking place across the recovering economy.
The Department of Labor released its weekly report on new jobless claims on Thursday at 8:30 a.m. ET. Here were the main metrics from the report, compared to consensus data compiled by Bloomberg:
- Initial jobless claims, week ended April 3: 744,000 vs. 680,000 expected and a revised 728,000 during the prior week
- Continuing claims, week ended March 27: 3.734 million vs. 3.638 million expected and a revised 3.750 million during the prior week
New weekly jobless claims data have generally been following a downtrend over the course of 2021, though they still remain elevated relative to historical trends. At 744,000, initial jobless claims remained well above the high of 665,000 new claims filed at the worst point of the Great Recession in March 2009. And the data continue to be choppy, with each of the last two weeks’ worth of new claims unexpectedly rising off a pandemic-era low.
This negative news caused a bit of a pullback in the futures this morning, but we’re not seeing the news impact market strength as much as I would have thought.
The market is still sitting at or near the fresh all time highs.
However, from a technical standpoint, we are seeing some fatigue.
One of the metrics we look at when determining the day’s trading approach is standard deviation. To do this, we use…
When you access this tool in your brokerage account, as I show you in today’s video, you’ll see two new lines appear on your day’s chart.
What these two lines tell us is, in regards to standard deviation, how far away are we from the current norm?
An elastic band pulled far enough will eventually snap back. In market analysis terms, we call that revision to the mean.
Right now, we are pushing against—almost through—the upper band. Generally, when we see that, we can expect a pullback.
Given all of this, we have some trading ideas to share with you today…
Have a great trading day, folks.
We’ll see you back here tomorrow.
Editor, Rude Awakening