Labor data still guide the market

Stocks opened lower and remain in the red through midday Thursday. The S&P 500 is down 5.28 points to 2154.45 and three points from session lows.

Treasury bonds are also seeing weakness after the latest jobless claims printed at 249,000 for last week and 9,000 less than expected. The yield on the benchmark ten-year rose to 1.73%.

Crude oil gained 50c to $50.30 and gold remains under pressure, losing another $12.5 to two-month lows of $1256.

Eight of ten market sectors are lower on Wall Street, led by Telecomm (IYZ), Healthcare (XLV), and Financials (XLF). Basic Materials (XLB) are seeing relative strength.

In the options market, CBOE Volatility Index (VIX) is up .45 to 13.44 and overall options are light. Roughly 3 million calls and 2.7 million puts traded across the exchanges through the first two hours. Projected volume for the day is 13.9 million and 15% below the one-month daily average.

Bank of America (BAC) Oct 7^th Weekly 16 puts, SPDR 500 Trust (SPY) Oct 7^th 215 puts, and VIX Nov 18 calls are among the most actives.

Looking forward, tomorrow’s jobs report is possibly the next major catalyst for financial markets. Economists expect the report the US economy to add 176,000 jobs and for the rate of unemployed to remain unchanged at 4.9%.

See Tradespoon’s Stock Forecast on iShares Long-Term Treasury Bond Fund (TLT)

The chart of the iShares Longer-term Bond Fund (TLT), above, highlights the recent weakness in the Treasury market. Shares, which hold a portfolio of longer-term Treasuries that mature in 20+ years, have suffered a one-week 3.6% drop and are now testing its September support/resistance area near $134 per share.

Some of this weakness in bonds, which is driving yields higher, seems to be weighing on stocks as well. Therefore, tomorrow’s jobs report will hold market moving potential because a strong report might very will trigger another round of interest rate ‘jitters”, which would likely result in a stronger dollar, weakness in bonds, further losses for gold, and slumping equities. In a perverse way, a weak jobs report might be greeted with a rally in stocks.

In addition to the aforementioned $134 level, the longer-term bond fund also has support at $133 and $132.2 per share. Resistance likely at $134.5, $135.2 and $136.80. As for the S&P 500, it held support at 2151 today. Beyond that, there’s support at 2144 and 2125. Resistance areas include 2160, 2177, and 2186.