NFP Beats, Futures Hover Near ATH's (Again)

by David

Happy Friday, folks! Another week has come and gone, and US Futures (sans the Russell) are glued to the ATH's. Will the nightmare ever end? We drifted higher all day yesterday, only to see yet another short squeeze into the close. The equity inflows are absolutely relentless, and with today's NFP report blowing away expectations (943k vs the 925k expected), and unemployment dropping to 5.4% vs the 5.6% expected, markets couldn't possibly be more exuberant. Having said that, the notable improvement in the labour market could give the Fed the ammunition it needs to taper bond purchases as early as Q4 2021. We all know the last time the Fed tried to taper, markets crashed, so when the same thing happens this time, how long will it be before they resume their bond purchases? I swear with each passing day, the market becomes less and less recognizable, and price action makes less and less sense.

As of 9:00AM, the SP is down -0.6% to 4,418.50, the Dow is up 0.16% to 34,995, the Russell is up 0.50% to 2,243, and the Nasdaq is down -0.51% to 15,091. We're seeing a solid bid for the dollar ( DXY ) as we slowly work our way back up to wedge resistance. We're sitting at 92.62 heading into the cash open, and up around 0.41% on the day. While the dollar is bid, the US10Y yield is rising also, potentially off the back of stronger than expected jobs data, and rising expectations of Fed tapering sooner rather than later.

Bitcoin ( BTCUSD ) had a solid rally yesterday tagging a 41k handle, while also recapturing the 21EMA (w) - I do expect a rejection today to end the week below the 21EMA (w). We're down -0.32% on the day, and sitting at 40 ,793. Gold on the other hand is seeing some notable outflows; we're down -1.63% to 1,779.

Lastly, Vix is down -0.69% to 17.14, and sitting just above the multi-year ascending trendline support. At the moment it looks as though markets will never fall more than a couple percent again, but there's a lot happening under the surface that retail investors aren't seeing, and the Fed knows they're going to be the reason markets crash again. Let's see how the month shapes up and if we get that correction we've been waiting so patiently for off the back of increasing Fed hawkishness. Have a great weekend everyone. Cheers, Michael.