Playing the Jobs Report

Growth of less than 150,000 in payrolls would probably prompt some aggressive short-term profit-taking on Friday -- and a lower close for the day

By Paul Cherney

On Friday, Dec. 3, the markets get to see the November employment report. The Street expects an increase of about 200,000 in the nonfarm payrolls figure. Something less than 150,000 would probably prompt some aggressive short-term profit-taking and a lower close for the day, but the sideways price action of the four trading days ending Tuesday of this week has established a well-defined (strong) layer of support.

If tested, I would expect this area to hold on a closing basis. That immediate line of Nasdaq support is 2,117-2,090.35. The index has additional support at 2,112-2,052, so the 2,112-2,090 area is a focus of buying demand. The S&P 500 has immediate support at 1,186-1,167 and overlapping support at 1,170.87-1,160.52, which makes the 1,171-1,167 area focus of buying support.

If the nonfarm payrolls number is greater than 230,000, bulls will command, but late in the session, the market could see profit-taking ahead of the weekend that pulls prices off the best levels of the day.

End-of-day momentum measures remain at levels that usually mean retracements in price are short in duration and shallow in depth. There is a tendency for some price weakness in the beginning of December which is usually a pretty good set-up for a lift into the end of the year.

Additional S&P 500 support layers are 1,177-1,160, then 1,147-1,127. The 1,147-1,127 area has a focus of support at 1,144-1,138.50.

Additional Nasdaq supports are 2,094-2,052 and 2,068-2,025, and that makes the 2,068-2,052 area thick with support. The next layer of support is 2,049.77-2,032.

Nasdaq resistance: There were about 7 trading days in January of this year when the Nasdaq traded sideways in the 2,119-2,153.83 area. The index exceeded the 2,153 level intraday on Thursday, Dec. 2, but the advance attracted sellers, not more buyers. Current Nasdaq resistance is a big band at 2,118-2,181.05, with a focus at 2,132-2,153.83. Next resistance is 2,205-2,328.

The S&P 500 has immediate resistance at 1,195-1,226.

Cherney is chief market analyst for Standard & Poor's

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