Employment numbers may suggest the economy is looking at a double dip, but but the stock market action still suggests a robust second half.
As you likely know by now, the economy added a scant 18,000 jobs in June - far, far below expectations of 125,000 jobs. Analysts and strategists immediately started chattering about a double dip and trouble for stocks.
But chatter on the trading floor was different - according to the Fast Money gang, it wasn’t terribly negative at all.
Market pros are talking about the Vix , ”which is not confirming the weakness,” says trader Patty Edwards. In fact, there's very little fear on the floor. "I'm using the weakness to buy," reveals trader Steve Grasso.
Both Grasso and Edwards say pros are much more focussed on the beginning of earnings season, which kicks off with Alcoa on Monday after the bell. Results from Corporate America are widely expected to be strong.
“I’m staying long into earnings,” Edwards says.
Kevin Kruszenski, head of listed trading, at KeyBanc Capital Markets in Cleveland, confirms what the Fast Money traders are saying. He deals with institutional clients and in a Reuters interview says "We are are buying more than we are selling.”
Trader Steve Grasso thinks the technicals tell the story. “1333 is soft support and 1325 should be stronger support. I added to a lot of my positions on Friday.”
On top of earnings, Grasso suggests bulls may quickly encounter another powerful catalyst - a resolution to the debt ceiling.
Although Grasso concedes that lawmakers in DC are jawboning about the debt ceiling in an attempt to score points politically – when push comes to shove he thinks politicians understand how serious the matter is – and will resolve it. “It might not sound like it now, but I’m hearing a debt ceiling resolution is probably around the corner,” he says.
The only Fast Money trader who’s even modestly skeptical of the rally is trader Zach Karabell. He says, “We needed a pullback and we got one. It could last into next week.”
But Karabell is hardly bearish. If you have a longer time horizon he thinks the global growth theme will dominate and push markets higher.
What do you think? We want to know!
