The markets all moved in the direction one would hope for after the Fed announced their QE2 program. The dollar fell, commodity prices rose, treasury yields came down, and stock prices went higher Thursday.
On Friday morning before the opening we found out a better-than-expected 151,000 jobs in October were added to the economy as reported by the Labor Department. Private sector hiring was up 159,000. This beat the Wall Street estimate of 60,000. The US unemployment rate will still remain at 9.6 percent for a third straight month. Due to the growth of the population and new people entering work force age about 150,000 jobs need to be added monthly just to keep the status qou.
The good ADP report earlier in the week gave a clue for the Friday employment report which usually gets stronger reaction from traders and investors. “The latest employment report, which showed stronger-than-expected hiring in October is still good news for the U.S. economy, but challenges remain”, said Mark Zandi, chief economist at Moody’s Analytics.“This is fantastic news …”.
So where do things go from here? Where things go is always anyone’s opinion, but it is not unusual for the market to consolidate with a narrow range day after a strong move which is what happened Friday. The market internals are starting to get a littel overbought so the market could base awhile (sloppy or otherwise), or pullback as some traders and investors take some profits from the long run up over the past two months.
It is not recommened to jump in to a stock that has already run up several bars no matter how exited things look or sound.. A stock having done so is more likely closer to a pullback that another big run up. If you buy breakouts wait for one. If you buy pullbacks wait for one. The odds will be betterfor a gain and in the case of a loss the stops will be a shorter distance from entry. Always insist on a sufficient risk to reward.
Trade with a plan.