SHORT TERM: good Payrolls report propels market, DOW +63
Overnight the Asian markets gained 0.5%. Europe opened higher and gained 0.9%. US index futures were higher overnight as well. At 8:30 monthly Payrolls were reported higher: +242K v +151K, the Unemployment rate was unchanged at 4.9%, and the Trade deficit was reported larger: $45.7B v $43.4B. The market opened four points above yesterday’s SPX 1993 close, immediately pulled back to 1987 by 10am, and then started to rally. The rally continued, with small pullbacks along the way, to SPX 2009 by 2pm. Then the first notable pullback, since Monday, took the SPX to unchanged at 1993. Then the market rallied, with the help of Crude, to close at SPX 2000.
For the day the SPX/DOW gained 0.35%, and the NDX/NAZ gained 0.15%. Bonds lost 13 ticks, Crude rallied $1.65, Gold dipped $2, and the USD was lower. Medium term support remains at the 1973 and 1956 pivots, with resistance at the 2019 and 2043 pivots. Today the WLEI was reported lower: 46.5% v 46.6%, GDPn was reported higher: +2.2% v +1.9%, and the MMIS was reported lower: 51.5% v 52.5%.
At 8:30 this morning the positive Payrolls report stoked another wave of optimism in the market. ES futures spiked, then retreated, then rallied again. The market opened slightly higher, pulled back, then moved to higher uptrend highs into med-afternoon. Having cleared the short term resistance at SPX 1999 just past 11am, the market had set its sights on the 2019 pivot range. While this uptrend has now progressed to the upper range of expectations, i.e. the 2019 pivot and SPX 2028, it still looks like a bear market rally. Will end today with a quote, and cover the details in the weekend update. Best to your weekend!
Psychology during bear market rallies seems to follow a fairly consistent pattern. “During secondary reactions [upward] in bear markets,” wrote DOW Theorist Robert Rhea in the 1930’s, “it is a fairly uniform experience for traders and market experts to become very bullish.”
MEDIUM TERM: uptrend
LONG TERM: bear market