Strange action in all markets post non-Farm payrolls

The non - farm payroll came out at 8:30 today. 
Here is the highlights from Bloomberg.
Released on 1/7/2011 8:30:00 AM For Dec, 2010

	Prior	Prior Revised	Consensus	Consensus Range	Actual
Nonfarm Payrolls - M/M change	39,000	71,000	160,000	98,000  to 225,000	103,000
Private Payrolls - M/M change	50,000	79,000	180,000	108,000  to 235,000	113,000
Unemployment Rate - Level	9.8 %		9.7 %	9.6 % to 9.8 %	9.4 %
Average Hourly Earnings - M/M change	0.0 %		0.1 %	0.1 % to 0.2 %	0.1 %
Av Workweek - All Employees	34.3 hrs		34.3 hrs	34.3 hrs to 34.4 hrs	34.3 hrs

An extremely strange drop in the unemployment rate, from 9.8% to 9.4%, while the number of jobs miss expectations by over 50%.

For a critical look at these numbers refer to the following Zerohedge article.

Since I covered AUDJPY yesterday I thought I would show an update of this chart.  At 8:30, a 60 pip move in less than 1 minute occurred (mini flash crash?).  It appears that the market is following the crash lower along with the stock markets, and the EURUSD pair which is below.

Note the increase volatility when the non-farm payroll was announced at 8:30 am.

AUD/JPY and S&P 500 January 7th, 2011

Daily chart shows the rally starting around July 2010.  the AUD/JPY is currently bouncing on the top of the 61.8% retracement from the may flash crash.  The pair will need to continue up as a failure to stay above the 61.8% retracement could result in the beginning of a correction for the current rally. Also the pair is trading between the 20 and 50 day moving averages which should provide decent support / resistance.  Watch for breaks above / below these moving averages.  200 MA is around the 80 level which could be retested if a correction occurs.

On the 5th of January, an impulsive move occurred.  to correction failed to retrace to the 50% level, and current price action is trading just above the 61.8% retracement level.  Looking at the bollinger bands it appears that the pair is trading above it, indicating that a pull back from the current price is likely.

 Other technicals are mixed, but it appears on a daily chart that 1-2 more days of upside and the pair will be in an over sold condition.  Where the MACD is currently selling pressure is likely to accelerate.

Check out this interactive chart @ www.freestockcharts.com

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This wave count I am going to keep updating until it is proven true or false.  Which means, I am expecting a impulse to the upside to be completing with wave 5 terminating between 1265 - 1300.  the 1285 area is the ideal target where wave 1 = wave 5 in length.  January 5th was the date that would have been equal to the time duration of the last wave 1.

This count's implication is that the correction should be relatively deep, and the first leg down should start around now and terminate around mid-end of February. 

Note that the current price action is trading at the bollinger band.  Therefore a pull back is more likely to occur than continuing buy pressure at this stage.

Hourly Chart of the S&P500.

 The current pattern appears to be forming an ending triangle.  Watch for accelerated selling if the 1250 level is broken.

Using hourly technicals MACD (top) and Slow Stoch (bottom) it appears momentum is down, and slight bearish divergences are occurring.  This can be seen with the recent lower highs on the indicators above compared with the higher highs in the price action.


A deep correct could force the S&P 500 to test 200 MA daily (1150), 200 MA hourly (1240) at the minimum.


I will repeat that January option expiration week might be telling.  Many aspects of the market and economy are making a lot of investors question the current situation, and how sustainable it is without allowing for natural corrections.
 

Shocked at the S&P 500 breakout? Don't be.

Just a reminder of my opinion of where we are on the S&P 500

Fib targets were in the 1260-1265 range and the 1295-1300 range.  I mentioned that 1300 as a psychological number could be the top, however, the 1285ish level is where wave 1 would equal wave 5.  Therefore judging at where we were at the close of December, the S&P was quite far from the price / time target of 1285 on January 5th.   Well today's pop does bring us closer to the projected level.  Please remember this is just my opinion on the markets, using technical analysis.

There are situations occurring in the FOREX market also that confirm the above analysis. For example, USD bounced as well off a level indicating that it could now start to rally strongly.  This is strange as it runs counter to what happened in the stock markets as the USD and S&P 500 have been inversely correlated lately.


Current S&P 500 move on a 30 min chart.

The current move faded a little in the afternoon, but that would be expected from such a large move in the morning.  January 7th friday could be telling, if you see a strong negative move, expect the week that follows to continue down.


I have mentioned previously as well, that January options expiration week could be extremely volatile as bulls and bears fight for direction. 

AUDJPY target hit

On December 29th, my post labeled AUDJPY and S&P500 a fresh look, contained a target level for a decline in the AUDJPY.

The level projected at 82.66 held very nicely (+/- 0.02 points).  Currently the price action still looks bearish.  After the purple target level was tested a fast move occurred, since the 50% retrace didn't hold, expect that level to be tough resistance for the pair.   

What is on every gold bugs mind?

From Kitco

Lets start by looking at gold around 9:30 EST on January 2nd, 2011.

Gold fell off its most recent high, and bouncing around the 1415 range.  I have mentioned this before, but I find that when gold is trading during the Asian market times, it seems to be an indicator of where the market is heading.  A few months back, gold was only dropping when the North American Markets were open just to be bid up a few hours later.  This led to new highs in the gold market.
To put this 1422ish resistance level into perspective lets look at the gold daily chart from the rally in August.

First note this chart is not up to date, as January 2-3 has not been accounted for yet.  The horizontal cyan line is the at 1415 which is where the gold market is currently.

First thing to note is bollinger bands, the week close almost directly on the top band.  Bollinger bands are designed for the market to trade within them 95% of the time.  Therefore, when the price action is above the bands it is likely that an adjustment will occur.  Which could be what we are seeing at the start of today.  This does not mean price can't run along the band or trade above the band for multiple days.

MACD Look very bullish, above the 0 level and the histogram has higher ticks that the previous indicating increasing upward momentum.

Slow Stoch however, is over sold.  This indicates that sell off is likely but then again, there is no definitive statements just probabilities.

Added some trend lines, so if we do see a raise to new highs I would expect a 1440-1445 resistance level, but at this stage I will not be looking to buy the metal market as it seems to be overextended.


One other bullish point is how well the Moving averages have held, for the past month and a half.  If the 20 / 50 MA start breaking down, I test of the 200 MA could be the next likely target.

Gold I am quite bullish on, and do believe the price will climb over the year, but currently, the stock market and commodities seem expensive, and any rush back to the USD will cause a decline in the Gold market.  Remember 2008, when stocks began falling, margin calls caused forced liquidations of almost all asset classes.  This resulted in metals taking a beating, however, silver and gold bounced back much more quickly out preforming the stock market.

Technical Charts from: Free Stock Charts