Jobs, Productivity Data Buoy Stocks

Equity Futures: Dow +105.00. S&P +7.80. Nasdaq +11.50. Japan Nikkei +40.00. German DAX +10.00.

U.S. Trade: A drop in initial jobless claims and higher productivity helped the major U.S. indexes climb in Thursday trade. Since the recovery phase began, investors have seen the labor market as one of the biggest threats to economic recovery. Increasing unemployment means lower forward consumption in an economy historically driven by a fast-paced consumer.

On this basis, the sizeable 20,000 drop in weekly unemployment claims was interpreted as a bullish sign, for those who view the glass as half-full and ahead of non-farm payroll data due for release tomorrow morning at 8.30am EDT. The pessimistic view was that the four- and 10-week averages were, literally, off the charts at +500,000 claimants, and the bears will no doubt have their day with that headline. However, today was not to be that day, and the bulls held court throughout the entire cash session. The acid test, however, will be those non-farm payroll numbers.

The market showed positive momentum, even from the overnight futures session, with all three indexes posting gains around the opening bell. However, the Nasdaq index outperformed the Dow Jones and the S&P 500, pulled higher by technology stocks on the back of Cisco's (CSCO - commentary - Trade Now) quarterly results.

S&P futures are trading near to the 1060.00 area, the place at which the market topped in the last few days of the previous week's trading. A break above this level would allow the market to test the 1075 area, the last important intra-day resistance before the 1100.00 benchmark level.

S&P Technical View: TheLFB Member Charts

Daily chart trend: Long. Main price points: 1080-1100. Looking for: Wave 5 or C top.

The price structure on the daily chart is showing two valid scenarios. On the left-hand side, it shows an impulse structure with five waves up from the 665 lows to the current highs. If this is correct, the wave 4 seen on the weekly chart will be rejected, as the fourth wave is a corrective wave, which means it cannot be sub-divided by a five-wave move. However, in this scenario, a three-wave push lower into a corrective blue wave 2, with a target somewhere around the 950 area is expected.

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At the time of publication, Hague held no positions in the stocks mentioned.

Marco Hague is one of the founders and principals of The London Forex Broadsheet (commonly known as TheLFB), a global forex trader portal with headquarters in the U.S. Hague began his career with the Bank of England dealing with foreign exchange control, and he has been trading for the last three decades. He has been involved with institutional risk asset ratio analysis and the implementation and maintenance of institutional trade desks globally.