30 Oct Markets Prepare for Job Reports
The indecisiveness in the stock market continues, with markets making wild swings in both directions. Yesterday was a prime example, with stocks opening strong just to experience a dramatic fall before the close of the market. So far today, stocks have already moved from being down to making massive gains. Overall, the volatility in the stock market isn’t a good sign for the near-term direction of the markets. Volatility can be a pre-curser to a more dramatic fall that I believe we will be experiencing at some point. To me, it’s not a question of if, only a question of when.
It’s Jobs Week, with ADP set to announce their estimate of new job creations in the month of October tomorrow, and the Bureau of Labor Statistics to announce theirs on Friday. It seems that the report could come in strong based on some of the data points that factor into the report being exceptionally strong. If that is the case, it will add upward pressure on mortgage interest rates. Since bonds are heading into this report just beneath a strong ceiling of resistance, there is more room for rates to move higher than being likely to decline. Not a good technical picture to face just prior to a job report release.
The US housing market continues to show signs of slowing. However, there is a big difference between a negative report vs just a slowing report. Home prices are still increasing, albeit at a slower pace.
We will maintain a locking bias.