Sep 072012

CL 10 12 (1 Min) DX 12 12 (5 Min) 09.07.12

9/7/2012 Monthly Unemployment Report (0230 HI time / 0830 EDT)
Non Farm Jobs Forecast: 123K
Non Farm Jobs Actual: 96K
Previous Revision: -22K to 141K
Rate Forecast: 8.3%
Rate Actual: 8.1%
Started @ 95.87
1st Peak @ 95.39 – 0235 (5 min)
48 ticks

Reversal to 96.59 – 0247 (17 min)
120 ticks

2nd Peak @ 94.09 – 0352 (82 min)
178 ticks (from origin)/250 ticks (from Reversal top)

Reversal to 96.74 – 0702 (272 min)
265 ticks

Notes: DX index is superimposed in blue and gold to show its effect. Initially perceived as a mixed report but quickly the internals revealed a very negative report with only 96K jobs created, while the rate ticked down 0.2% and the previous report was downgraded 22K jobs. The drop in the rate was attributed to nearly 400K people leaving the work force, so once again this was very poor news for an economy trying to recover. The market initially shorted for 48 ticks in 5 min, then reversed for 120 ticks 12 min later due to the dollar drop. Trading sideways until the pit open at 0300, it dove 250 ticks in about an hour. Then as the dollar began to drop significantly on the news, the CL rallied for about 3 hours from 0352 to 0702 for 265 ticks. The initial spike crossed no SMAs or Pivots, then the reversal crossed all 3 major SMAs and the PP Pivot. The 2nd Peak fanned downward to cross all 3 major SMAs and the S1 Pivot with ease, then did not challenge the 13 SMA much until after the pinnacle. Then the last reversal crossed everything on the upward rebound, driven by the dollar. With JOBB, you would have filled short at about 95.73 with about 7 ticks of slippage. Watching the range chart, I would place a buy limit at 95.55 after it hovered between 95.53 and 95.61 for several seconds. It did continue lower gradually on the next 4 bars, but that is not typical behavior for this report. The reversal was abnormally strong but reacted to the fall of the dollar of 0.42. As the dollar went sideways until 0400, oil dropped strongly. Then the dollar fell another 0.30 from 0400 to 0500 which caused oil to rally until 0700. If you are savvy, you can watch the dollar and place trend trades on the CL for 50+ ticks conservatively in these scenarios as the CL reacts inversely.