Stock Market Dodges Jobs Report Bullet, Crypto Reserve Details Disappoint, Germany May Go Nuclear

To gain an edge, this is what you need to know today.

Jobs Report Bullet Dodged

Please click here for an enlarged chart of SPDR S&P 500 ETF Trust (SPY) which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

• The chart shows that the stock market is at the 200 day moving average.  Here are the key points:
  • The 200 day moving average is very powerful, and all investors should pay attention to it.
  • The reason the 200 day moving average is so powerful is because legions of investors believe in it and act on it, and the media publicizes it.
  • Other than the deeply held myth, the 200 day moving average does not have any special power.  Afterall, why not a 190 day or 210 day moving average?
  • As you know, The Arora Report is rigorously analytical.  Rigorous analysis shows that the 200 day average by itself has no magical power.
  • Legions of investors buy stocks when the stock market pulls back to the 200 day moving average because they erroneously consider the 200 day moving average as a major support.  There is no analytically valid basis for this myth.
  • Legions of investors also sell stocks when the stock market breaks below the 200 day moving average.  Again, there is no analytical basis for this belief.
• RSI on the chart shows that the stock market is oversold.  Oversold markets tend to bounce.
• The stock market just dodged a bullet from the jobs report.  Wall Street’s positioning was such that both a weaker jobs report or a stronger jobs report would have caused a big sell off.  Understanding the important market mechanic of positioning can give investors a big edge.  Wall Street professionals keep nuances of market mechanics close to the chest because of their very high value.
• The jobs report came roughly inline with expectations.  Here are the details of the jobs report:
  • Nonfarm payrolls came at 151K vs. 159K consensus.
  • Nonfarm private payrolls came at  140K vs. 145K consensus.
  • Average hourly earnings came at 0.3% vs. 0.3% consensus.
  • Average work week came at 34.1 hours vs. 34.2 …

Full story available on Benzinga.com