What Jobs Number Does the Market Want?

 | Jul 07, 2017 | 6:00 AM EDT
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TLT

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tsla

Does anyone know what sort of employment number the market wants? I feel as though I have no idea.

A strong number should take bonds down further, and lately we've seen an awful lot of bonds down/stocks down. So would the market really want a strong employment number? What about a weak one? I suppose a weak one would rally bonds (they are a bit oversold), but wouldn't that mean the economy is not terribly strong? And as I've discussed, there is that 3% GDP number everyone keeps citing (but never seems to arrive). How would we get there?

What's the Goldilocks number?

Then there is the chart of the PowerShares QQQ ETF (QQQ) that everyone watches. It can't break under $136 support. It has been milling around this area for a week. I also think the fact that it hasn't broken down through the previous lows has given folks a desire to buy these stocks.

Notice how this last leg down in the QQQs happened right as the bonds -- let's use the iShares 20+ Year Treasury Bond ETF (TLT) -- turned south. In the last few days, bonds have continued on their southerly path, but the QQQs have milled about. Which one is the leader? I don't know.

What I do know is that if we could get a real breakdown in the QQQs, we could get some panic and a good oversold condition. If we could get a real breakdown in the QQQs, I think we could get a long list of reasons why we don't want to buy these stocks instead of a lineup of folks dying to buy the dip, afraid they might miss the exact low in Tesla (TSLA) , for example. The former is bullish to me, the latter not so much.

If we could get a breakdown in the QQQs, we might even see the 10-day moving average of the put/call ratio shoot up. Notice that when it shoots upward, we get a decent low in the market.

If we could get a breakdown in the QQQs, the "what if" for the Nasdaq McClellan Summation Index using volume would scoot right over +2,000 (see the November low, or the February 2016 low, both over +2,000). Right now it is at +1,600, where it has seen an oversold condition for most of this year, but as you can see, at some point you need a better cleanout than this to lift the market more. We shouldn't keep getting these oversold readings every few weeks if it's a real cleanout. If we had a breakdown, we'd get the sort of oversold reading that is all-encompassing and bullish.

And who knows, we might even see a jumpy VIX. That would probably clean out all those folks who have been shorting volatility all year, too.

So of course the employment number will be benign and we will not get that better give-up. It's been that way all year, hasn't it?

For more market analysis from Helene Meisler, sign up for Top Stocks, published five times a week.

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