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Friday’s Jobs Number: Trading The Aftermath

With the market trading little changed this week, the bulls and bears could do battle Friday morning in the aftermath of the jobs report. Will you be one of the innocent bystanders caught in their crossfire?

What should you expect?

It’s widely believed that Friday’s jobs report will show employers cut fewer jobs in August, perhaps the least amount in a year.

Specifically, aReuters survey of 81 economists forecast employers cut 225,000 jobs last month, the smallest cut since August 2008. The survey also shows the unemployment rate edging up to 9.5 percent from 9.4 percent.

"(However) because the overall tone of economic data has been strong recently the market may be expecting something a little better than consensus," reveals Michelle Meyer, Barclays Capital Economist.

But those kinds of numbers should signal healing in the labor market. In other words the “less bad” scenario will be viewed as a positive.

Investor Conundrum

That seems straight forward. A better than expected report takes stocks higher and a worse than expected report sends them lower.

But not so fast. There’s a wildcard in the mix that threatens to make Friday a mess.

We’ve also seen a growing trend in the market where stocks don’t move on good news. "The market now seems to be reacting negatively to positive news, and that's a change that has to be noted," counsels Carl Birkelbach, of Birkelbach Investment Securities in Chicago.

And the situation gets even cloudier. The weak consumer is widely considered a key factor that could derail the recovery – if we get bullish numbers will they quell growing fears about spending?

How should you trade it?

I don’t think investors are as fearful of the jobs numbers as expected, says Joe Terranova. There was a lot of late-day buying on Thursday which suggests people on the Street think unemployment could surprise to the upside. If it does I’d get long the financials as a bet the economy is in the recovery stage.

However, if the jobs number does not surprise to the upside I think the market trades lower, speculates Jim Iuiro on Fast Money’s Halftime Report. And I think in the framework of a larger bull market we are still in the midst of a correction that takes the S&P down to 975 or even 950.

And for the long term, if the jobs report seems bullish you can get ahead of a stronger employment picture with Manpower and Monster , counsels Guy Adami.



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Trader disclosure: On Sept. 3rd, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Najarian Owns (BAC) And Is Short (BAC) Calls; Najarian Owns (C) Calls; Najarian Owns (CBST) Call Spread; Najarian Owns (GS) Call Spread; Najarian Owns (JPM) And Is Short (JPM) Calls; Najarian Owns (MS) And Is Short (MS) Calls; Najarian Owns (MSFT) And Is Short (MSFT) Calls; Najarian Owns (PALM) Calls; Najarian Owns (PDE) Calls; Najarian Owns (SEPR) Time Spread; Najarian Owns (YHOO) Calls; Terranova Owns (FCX), (AMZN), (POT), (SU), (WFT); Terranova Owns December Gold Futures; Terranova Is Short (TM)

For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO
Virtus Diversifier PHOLIO Owns (IGE)
Virtus Diversifier PHOLIO Owns (DBC)
Virtus Diversifier PHOLIO Owns (DBV)
Virtus Investment Partners Owns More Than 1% Of (CAL)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (SKT)
Virtus Investment Partners Owns More Than 1% Of (TNB)
Virtus Investment Partners Owns More Than 1% Of (UA)
Virtus Investment Partners Owns More Than 1% Of (CLB)

Seymour Owns (AAPL), (AA), (BAC), (UNG)
Seygem Asset Management Is Short (FXI)
Seygem Asset Management Owns (MTL)
Terranova Owns (QCOM)
Seymour Owns (VIP)


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