On Friday investors were struggling to understand all the ramifications of the jobs report, which showed the economy shed only 11,000 jobs in November, well below the 130,000 loss financial markets had braced for.
Also, it showed the unemployment rate unexpectedly dropped to 10 percent from October's 10.2 percent.
At first investors took the data a welcome sign that the economic recovery was gaining strength.
However, after climbing by triple digits, investors later sent the Dow into negative territory as they worried the jobs data could mean the Federal Reserve might have to raise interest rates earlier than anticipated.
Considering weak dollar trades have been driving the market, what are all the ramifications of this jobs report and how should you be positioned?
Instant Insights with the Fast Money traders
It seems to me investors are unwinding their weak dollar trades on fears of higher interest rates, speculates Tim Seymour. I do think the S&P breaks above 1110 - a point of signficant resistance - but not today.
I think it’s healthy that the market is rolling over, adds Eugene Profit. The market was overbaked and this kind of profit taking is healthy.
I’m a buyer of this market, adds Katie Stockton of MKM. I like that the S&P 500 got above resistance this morning and I like the positive action in the transports . (If you're a Dow theorist that's a bullish combination.)
JOBS REPORT LEADS TO DOLLAR SURGE
The jobs report played havoc the currency traders as the dollar soared against the euro and a basket of currencies, after the strong jobs triggered speculation of a rate hike.
What must you know?
A jobs recovery is the last piece of the puzzle before we can say we're in full recovery, so it raises the question that maybe rates will go up sooner rather than later, explains Fabian Eliasson, vice president of FX sales at Mizuho.
STRONGER DOLLAR DRAGS DOWN GOLD
The stronger dollar sent U.S. gold futures tumbling - they dropped below $1,200 an ounce in heavy trade on Friday, losing more than 2 percent.
What must you know?
Once gold broke below $1200 I noticed that a lot of electronic stops went off, says Joe Terranova. That happened again when gold slipped below $1180. That next critical level is $1135.80. Today's action leads me to believe gold tests $1135.80.
My charts say support is around $1172, counters Katie Stockton. But a correction can be very significant in this kind of environment where we’ve had a parabolic uptrend. However long term I think gold goes higher.
APPLE BREAKING DOWN
The traders are closely watching the action in Apple which has broken its 50-day moving average. What do they make of it?
I don’t think it’s as significant as investors are making it out to be, says Katie Stockton of MKM. I see additional support around $185. In this positive momentum environment I think it’s still okay to own.
However if you’re looking to trade the space I’d consider looking at Dell , which has underperformed.
FINANCIALS PARING GAINS
The trader are also keeping an eye on bank stocks which seem to be underperforming the market. How should you trade this space?
I’m seeing huge option volume in Citigroup and BofA, reveals Scott Nations of Nationshares.
A stronger labor market should be good for financials, says Tim Seymour. In the space I like BofA and Wells. Even though Wells may have to price secondary to repay TARP, I think that’s already in the stock. The reality is that Wells Fargo has taken enormous market share out of this crisis.
And as a ‘tell' I’m watching Goldman, he adds. At $165 I think it’s attractive.
RETAILERS ROLLING OVER
The XRT remained in positive territory with investors likely interpreting a strong jobs report to mean stronger than expected holiday sales.
How should you trade retail now?
If you’re in Amazon, I’d take profits, counsels Scott Nations. It’s come a long way and I’m not certain holiday sales will be strong enough to justify it’s valuations.
CHART OF THE DAY: KOHL'S IS A BUY?
I’m watching the action in Kohl’s, explains Kate Stockton. It’s come down into support around the low 50's and resistance is around 61.
CALL THE CLOSE
Tim Seymour: I think the market struggles at 1110.
Scott Nations : It’s all good news.
Katie Stockton: I’m a buyer. I like that the S&P 500 got above resistance this morning and I like the action in the transports.
Eugene Profit : Take profits.
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Trader disclosure: On Dec. 4th, 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 (AAPL) Calls; Najarian Owns (AMAT) Calls; Najarian Owns (BAC) Calls; Najarian Owns (DD) Calls; Najarian Owns (GE) Calls; Najarian Owns (INTC), Is Short (INTC) Calls; Najarian Owns (TXN), Is Short (TXN) Calls; Najarian Owns (HUN) Calls; Najarian Owns (CLF), Is Short (CLF) Calls; Najarian Owns (HUN) Calls; Finerman Owns (GGWPQ), (TBT); Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Call Spread; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Owns (M), (MSFT), (WMT), (CBY), (PLCE); Finerman's Firm Is Short (KFT), (IJR), (IWM), (SPY), (MDY), (USO), (UNG); Terranova Works For (VRTS); Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
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