Market surges as strong jobs data fuels optimism, but risks loom | October 4, 2024

The jobs report for September came in much stronger than expected, with 254,000 jobs added versus the 147,000 estimate. The unemployment rate also dropped to 4.1%. This news pushed the S&P 500 higher in pre-market trading as investors reacted positively to signs of a strong economy. While this reduces chances of rate cuts, it’s still seen as a net positive for now. However, future revisions to this data could change things, so it’s worth keeping an eye on that.

For the S&P 500, the key level to watch is 4570–4575, which was a previous high. The market might push toward 6000, but any rise could lead to profit-taking, especially with geopolitical risks hanging over the weekend. The dollar is also up, hitting five straight up days. The charts suggest it could retrace to the 104.85–105 range. If it does, that could set up a chance to short the dollar and move into assets like gold, which tend to do well when the dollar weakens.

The 10-year Treasury yield is also breaking out of its recent downtrend, which could push it up to around 4.3%. If yields rise, it could impact stocks, especially growth sectors sensitive to interest rates.

In terms of trades, shorting VST, a utility stock, makes sense as it’s had a big run-up. Utilities may start to underperform if economic data continues to show strength. Nvidia is also testing a key level in a wedge pattern, and if it breaks out, there’s potential for more upside, but be mindful of resistance. Walgreens (WBA) is showing a wedge pattern that could lead to a short-term breakout if it gets above $9.

Gold has pulled back as the dollar strengthened, but a reversal in the dollar could send gold higher. Oil is nearing $80 a barrel, but the move seems driven more by geopolitical risks than fundamentals. It could go higher short-term, but there’s a chance of downside once the situation stabilizes.

Bitcoin is holding a major support level, which is a good sign, but it’s still heavily tied to market risk-on sentiment. If stocks take a hit, Bitcoin could see sharper drops due to its volatility.

The market looks strong right now, but potential risks like geopolitical tension and data revisions suggest keeping a close watch. There are chances to profit on both the long and short sides, depending on how these factors play out.