Yesterday US equity trading resumed after a 2 day hiatus due to hurricane Sandy. Volume was a little light but overall trading appeared to be normal. This the ADP employment report was released, coming in at 158,000 versus 155,00 expected and 162,000 last month. However, ADP has switched to a new method for gathering data this month meaning that there is no track record to show how well the numbers will predict tomorrow’s NFP report. Jobless claims were also released this morning, coming in at 363K, down 9K since last week. The market is little changed by this data and looks to open nearly unchanged from yesterday’s close. The e-mini S&P futures tested the 1400 level in overnight trading for the third night in a row, and the level was once again swiftly defended by the bulls. This appears to be a key support level that is likely to be tested in a regular trading session before the market moves higher.
Though Ford’s numbers this quarter are good, it is still unclear if North America can carry the company through a European recession. If Ford’s European restructuring is able to minimize losses while sales remain robust in North America the company will be fine, but that is a big if. To play Ford I like this strategy, which keeps risk fixed and profits from momentum the stock might have after a great quarter like this one. Ford’s chart suggests the stock is likely to test the 12-13 range it traded in during the first quarter of 2012, which would make the Dec. 12 calls a profitable trade.