Ahead of Friday’s all important jobs report, the stock market seemed to be stuck in neutral with investors fretting about fundamentals.
The Fast Money pros, however, were focused on the technicals with the action in S&P raising eyebrows after the major index crossed a key level to the downside.
”The S&P breached a key level at 1311,” explains trader Steve Grasso.
That’s important because 1311.80 was the S&P’s lowest point in May – a level the index touched on the 24th of that month. Traders had thought that level might provide support, at least in the near-term.
If the S&P now closes below 1,311 it could open the window to sharp moves lower. If that happens, “I think we’re heading down to 1295, the April low,” says Grasso.
From there, technical analysis suggests the next down move would take the S&P to its March lows near 1260-1250, also the index's 200-day moving average.
“1257 is flat on year,” says Grasso. “(If we get there) that’s a big deal – that’s put up or shut up time. – If institutions are behind the curve either they get back in or let them fade.”
The usually bearish Guy Adami is a little more optimistic. “Honestly, I think the market is setting up for opportunity. 1300 should be a level of support,” he says. To support his thesis, Adami points to the decline in the Vix, which he takes as a signal that the market doesn’t believe a sharper sell-off is imminent.
Jon Najarian remains fairly bullish. Looking at the action in the Vix, he says “the panic isn’t really there. Nobody is desperate to buy insurance at these somewhat pumped up levels.” He goes on to tell the desk he’ll likely be a buyer on Friday, after the jobs report.
