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Jobs Report Preview - What Must You Know?

If you’re a trader, there’s a good chance you’ll be in the saddle early Friday morning waiting for the jobs report.

The labor market is probably your most important ‘tell’ as you try and gauge the strength and durability of the recovery – and place your bets accordingly.

What must you know?

According to Reuters estimates, the latest numbers suggest employers cut 175,000 workers from their payrolls in October. Though that’s still negative it would be the smallest amount for any month since August 2008.

In fact, the markets will likely find that number or anything lower – bullish.

It would suggest "companies are starting to feel a little more confident… (it would be viewed as) a continuation of the recent improving trend," explains Robert Dye, senior economist at PNC Financial .

However, there’s still the nagging problem of unemployment. There is a chance that the unemployment rate will cross the psychologically important 10% mark in October.

That could spook investors. And it could also call into question a company’s ability to be productive.

“I think there are massive productivity gains that are unsustainable because companies effectively have over-cut their payroll," says Deutsche economist Joe LaVorgna on Fast Money. So if there's any incremental improvement in the economy it has to lead to hiring."

What’s the trade?

If the jobs report shows a higher-than-expected jobless rate or a bigger loss of jobs than forecast, it could rattle investors and send them fleeing into the safe haven of U.S. government bonds and the U.S. dollar.

However, if the jobs report comes in at or better than expected it could trigger a market rally.

And Pete Najarian has some other thoughts.

"I'm seeing unusual options action in ITT , he says. Investors seem to think this education stock may have upside because of increased unemployment."


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Trader disclosure: On November 5th, 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); Terranova Owns (GS), (OIH), (CAM), (MA), (JOYG), (RIMM); Najarian Owns (LAZ), Is Short (LAZ) Calls, Owns (LAZ) Puts; Najarian Owns (RIMM) Call Spread; Najarian Owns (SBUX), Is Short (SBUX) Calls; Najarian Owns (UUP) Calls; Najarian Owns (YHOO), (YHOO) Puts; Najarian Owns (ESI) Calls; Grasso Owns (AAPL), (ABK), (ASTM), (BA), (BAC), (C), (COST), (CSCO), (FAZ), (PFE), (PRST), (WMT), (V)

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