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Market doesn't like employment numbers

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This morning's jobs numbers have sellers at the door and they're knocking on it fairly hard. Nonfarm payrolls came in down 86,000 and the consensus by many economists was for 66,000 and the number looks to have the recession and stagflation thinkers acting with some conviction. Bond YIELDS have turned south and there are buyers in bonds. I don't think this action will be good for stocks if the past is any indication of the future.

Stock futures lower

Since the economic numbers hit the wires, S&P futures (SP01M) have traded lower and are currently down 6 points. NASDAQ futures (ND01M) are trading down 25 points and Dow future (DJ01M) is lower by 105.

I'm long and I've got to get short

Yesterday I got a little bullish with a 1/2 position long in AMR Corporation (NYSE:AMR) and bought 1 June35 QQQ call (QQQFI). This morning I'm going to go back to a stock we had recently been trading in shares of Read-Rite (NASDAQ:RDRT) and look to get short. Here's how we're going to control our risk and look to get back on the right side of things.

Read-Rite Systems Chart - 60-minute interval.

Traders that recently traded shares of RDRT now have a good feel where short-term support lies and they also know where the stock is currently trading. Yesterday, shares of RDRT rallied right up to 2 good levels of resistance that make for a good shorting opportunity. This morning I'm looking to short a full position in shares of RDRT as the QQQ call we bought yesterday will now serve as a partial hedge in case the market turns on a dime. Our downside target will be the $7 level. We'll place our stop just above downward trend near the $7.75 level.

Jeff Bailey
Senior Market Technician
www.premiermarkets.com

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