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Markets Take No Prisoners: Dave's Daily

Oil prices moved from $94 to $102 in 7 hours only to settle at $97.80 -- how's that for volatility? The euro spent the first half of Friday at 145 (already down 300 bps from Thursday) to close at around 143 after rumors (later denied) spread regarding Greece dropping euro. Silver and gold were all over the map again with rumors persisting of more margin calls.

U.S. stocks climbed nearly 175 points early based on the employment report showing 224K new jobs added while the unemployment rate inched up to 9%. Lost in this report were details regarding the Birth/Death Model (estimates of new businesses created or closed) or the number of part time jobs being created by the McDonald's of the world and lastly, a five vs. four week report.

HFT algos are programmed to react to headline numbers that beat expectations. The employment data was a beat and algos jumped on the news. But, remember, based on Wednesday's poor ADP jobs report and Thursday's Jobless Claims data employment report estimates were sharply lowered making Friday's news a large beat. More thoughtful types started selling the news around noon and doing so the rest of the day.

Leading U.S. stocks higher were materials (XLB) and the higher price-weighted components of the DJIA (BA, CAT, CVX, IBM, MMM and so forth).

All this volatility and conflicting news, while putting on a great show, causes Main Street to trust markets less in my opinion. This chaos in commodity markets is a major turn-off and will have negative consequences longer-term.

We've beaten the commodity story to death but we still await the juicy details from the exchanges as to the real story behind their draconian actions. Some of this may be contained in the silver Commitment of Traders report and Open Interest. Until we can analyze this properly let's wait. Further, there will be some serious trading casualties announced in the coming days so stay tuned for that.

The Fed continues to aid bulls with more QE Friday and ongoing poor economic data means there's no rush for them to stop POMO.

Trading volume was also higher today than the average over the past few months. Breadth, per the WSJ, was quite positive; but, a glance at the 5 minute SPY chart shows most volume was in selling.



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