This morning’s Nonfarm Payrolls number was crucial in keeping the bulls momentum going and futures were trading higher throughout the night ahead of the overseas market. There were other clues left on Thursday that were also bullish but this gave us a good feeling coming into this morning’s report the market would be okay.
The print of 192,000 for March was not too hot, and too cold as higher revisions were made for the months of January and February. The whisper numbers of 300,000 jobs added were a bit ridiculous but we were surprised Nonfarm Payrolls couldn’t crack 200,000. The revisions were good, as it lifted the overall monthly average, but April’s numbers will certainly need to see gains well north of 200,000 to say the economy is “recovering”.
Initial Public Offering’s (IPO’s) continue to pour in as companies looking to go public take advantage of market highs and before, eventually, market weakness. There are four today and we will cover two of them.
After yesterday’s close, GrubHub’s (GRUB, $35.69, up $9.69) pricing for 7.41 million shares came in at $26 and was above an expected range of $23-$25. Shares opened this morning on the NYSE at $40 and have traded up to $40.79.
Over on the Nasdaq, Five9 (FIVN, $8.11, up $1.11), a cloud software company, priced 10 million shares at $7 and below the expected range of $9-$11.
We have mentioned the talk of a frothy IPO market but we are ignoring the noise as there have been some interesting companies that have come to market. The ones that are overpriced, we will look to short them with put options down the road. The IPO’s that look good and might be underpriced, or show good growth potential, we will use call options to play runs to higher prices.
Although we weren’t worried about today’s open, we are concerned with the pullback. We mentioned a “double top” could be forming, or the development of another trading range, if the indexes finished lower today. Following another push to all-times, the market is trending lower and we would like to see a rebound into the close to confirm possible higher prices into next week. If not, we will continue to protect profits.
We closed 3 more winning trades this week and while we have started a new batch of trades, we mentioned we still have to be careful. We are in great shape to add new trades, calls or puts, but with the possibility of a pullback or trading range continuing, we don’t have to rush trades.
As we make the turn, the Dow is down 64 points to 16,508 while the S&P 500 is lower by 13 points to 1,875. The Nasdaq is declining 94 points to 4,142 and the Russell 2000 is getting hit for 18 points and is down to 1,163. Not pretty. The VIX kissed 12.60 but is up 0.36 to 13.72.
We could have additional Trade Alerts into the close but if you do not hear from us, we will be back Sunday night with the Weekly Wrap and on Monday morning with the Daily. Until then, have a great weekend everyone!