Employment gains fail to support E-mini futures

Good day! This past week in the markets has consisted of a lot of ups and downs as market participants attempt to digest the turmoil in the Arab nations as well as the economic situation closer to home. While the main focus abroad is on Libya at the moment and the struggle to control the country's vast oil supplies, stateside the focus turned to the latest employment reports on Friday.

On the surface, the news was strong. Non-farm payrolls rose 192,000 to 130.52 million, while December and January payroll estimates were both upwardly revised by 58,000 jobs. Private sector employment was up 222,000 and the national unemployment rate fell from 9% in January to 8.9% when a tick higher to 9.1% had been anticipated. This latest reading is the lowest since April 2009.

Dow Jones Industrial Average (Figure 1)

Despite the growth, some estimates placed February's gains closer to 300,000 jobs. The long term unemployment rate also remains dismal at 15.9%. These are people who have been without full-time employment for 27 weeks or more and it makes up 43.9% of those currently unemployed. Hourly earnings, meanwhile are virtually unchanged, as is the average work week (34.2 hours).

The index futures were already having a hard time holding onto Thursday's gains in overnight trade heading into Friday. The rapid buying on Thursday morning had slowed after the first 30 minutes of the day and the indices formed a series of slightly higher highs throughout the remainder of the session. This type of action can be troublesome to the bulls despite the advance, because it increases wariness and it's common to see rapid reversals once the lower end of the trend channel breaks. In this case, while the bias was already favorable, it was Friday's jobs data that was the catalyst.

Selling hit immediately following the data and gained momentum intraday after 10:00 a.m. ET. A third move continued the trend into noon, exhausting it by 12:30 ET. The rest of the session was spent in a trading range with a bullish bias on the 5 minute charts heading into the end of the session, although the larger 15 minute charts still remain bearish into Monday.

S&P 500 (Figure 2)

The Dow Jones Industrial Average ($DJI) had a loss of 88.32 points, or 0.72%, and closed at 12,169.88 on Friday. Four of the Dow's thirty index components posted a gain. Each of them only managed to close fractionally in the black. The strongest performer was Travelers (TRV), which closed higher by 0.22%. The weakest performers were General Electric (GE) (-1.83%), Hewlett-Packard (HPQ) (-1.37%), American Express (AXP) (-1.31%), and DuPont (DD) (-1.25%). The Dow ended the week higher by 0.33%.

The S&P 500 ($SPX) fell 9.82 points, or 0.74%, and closed at 1,321.15. Agilent Technologies (A) (+9.18%), JDS Uniphase (JDSU) (+8.87%), Davita Inc. (DVA) (+3.66%), and Netflix (NFLX) (+3.61%) were Friday's top percentage gainers in the index. The weakest were Monster Worldwide (MWW) (-6.42%), CF Inds. Holdings (CF) (-4.16%), CA Inc. (CA) (-2.99%), and Citigroup (C) (-2.99%). The S&P 500 ended the week higher by 0.10%.

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