Desire To Be Invested Trumps Today's Jobs Report

The S&P futures were lower before the open this morning, and then we got a jobs report that appeared worse than expected. Nonfarm payrolls declined -95,000 in September, which is well below the expectations for a figure closer to unchanged.

Maybe it was the fact that private payrolls increased 64,000, or maybe it was that the big decline was due to government workers declining by 159,000 (census workers), but I think the real culprit was what I have been talking about and that is the number of folks who are underinvested in this market.

The desire to put money to work and buy any dip caused the market to bottom in the first hour of trading, and the dip was minor, and from there it was a steady rise into the close. The S&P closed at 1165, but the real headline will be the Dow closing above 11,000.

Among the sector ETFs, materials stocks (+1.97%) led today's action, followed by energy (+1.25%). Safety stocks like consumer staples (+0.21%) and utilities (+0.31%) lagged. But the biggest move of the day was in the ag space, after the USDA released its October supply/demand report which was very bullish for corn, etc. The ag etf (DBA) spiked +6.25% today, quite a move. Many ag stocks vaulted to 52-week highs.

Commodities were also very strong, with oil finishing higher at $82.85 and gold closing at new highs at $1346.50. The dollar was weak today, which likely helped.

Bond yields were weak, with the 10-year yield closing out the week at 2.38%; and the volatility index (VIX) fell -4% to 20.71.

Trading comment: Many of the market leaders that were sold off earlier this week have bounced back nicely. The FFIV/VMW/CRM complex also bounced, but I still think the huge volume we saw there means that we are in for a longer period of consolidation. I think the market will remain strong into year-end, of course there are always pullbacks, so it will be interesting to watch for what group takes the reigns from the "cloud" stocks and lead the market from here. Industrials and materials have been heating up, and it is really only the financials that continue to show unimpressive moves.

Happy trading, and have a good weekend.

long FFIV, VMW