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Quick Take: Jobs Data Scare

NEW YORK (TheStreet) -- TheStreet's Debra Borchardt is with Alan Valdes of DME Securities to talk about today's price action and what to expect going forward.

The markets are finally starting to see some of the selling pressure that traders and investors have been talking about for the past couple of weeks. With the mediocre ADP jobs report this morning, many might be starting to think that the nonfarm payrolls report on Friday will be dismal as well.

In previous weeks, we've seen that bad news has been good news, with the market rallying on the expectation that the Federal Reserve's stimulus program would remain in place. However, investors have begun to fear that it may soon begin to taper off.

"Jobs really are the most important thing. QE undoubtedly helps the market, but for the general economy, you need those jobs," Valdes added.

According to Valdes, the Federal Reserve has a decision to make with inflation levels so low, we're beginning to teeter on deflation. But every time the Fed does talk about slowing things down, the market starts to crumble.

Without question, the employment report on Friday will be big. With summer usually being the slow time of the year, it will likely set the pace for the next several months.

Add in the FOMC meeting on June 19, and the second-quarter GDP result due out at the end of the month -- June could be very volatile.

Even though the "buy the dip" mentality seems exhausted, the market hasn't flipped a switch yet. With such hefty gains this year already, a lot of traders may just be taking their profits off the table ahead of the potential June swoons.

"So far, we don't have a confirmed correction in place," Borchardt concluded.

-- Written by Bret Kenwell in Petoskey, Mich.

Bret Kenwell currently writes, blogs and also contributes to Rocco Pendola's Weekly Options Newsletter. Focuses on short- to intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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