Lousy Jobs Report Weighs On Stocks

Friday, July 8, 2011
Stock Market Commentary:

It was encouraging to see stocks rally on Thursday as investors digested a slew of economic data from across the globe. It is also encouraging to see that all the major averages remain above their respective 50 DMA lines and are on track for a second consecutive weekly gain which suggests the bulls remain in control of this market. The next level of resistance is their respective 2011 highs.

Monday-Wednesday: Stocks Edge Higher

Stocks were closed on Monday in observance of the July 4th holiday. Overseas, stock markets edged higher as investors awaited Friday’s much anticipated jobs report. Stocks were quiet on Tuesday after the Commerce Department said U.S. factory goods rose+0.8% in May to $445.29 billion. The gain followed a large decline in April and bodes well for the ongoing economic recovery. The report also reiterated a series of stronger than expected economic data which suggests the economy is improving. Elsewhere, Moody’s Investors Service, a popular rating agency, downgraded Portugal’s debt to junk status which sparked fresh concerns regarding the European debt crisis.
Before Wednesday’s open, China decided to raise their key interest rate by 25 basis points to curb inflation and their robust economy. Keep in mind that a slowdown in China curbs demend for so-called risk assets. Therefore, this put mild pressure on a stocks and a slew of commodities. At 10am EST, the ISM released its service index which fell short of the Street’s estimates and bodes poorly for the economic recovery.

Thursday & Friday: Job Picture Improves; Stocks Rally:

Before Thursday’s open, the European Central Bank (ECB) raised rates by 25 basis points to help curb inflation. The ECB raised rates to +1.5% which is the highest level since March 2009. Germany, Europe’s largest economy, said industrial production rose by +1.2% which topped the Street’s estimate for a gain of +0.8%. In The U.S., ADP, the country’s largest private payrolls company, said U.S. employers added +157,000 which easily topped the Street’s estimate for a gain of less than 100,000. Even though the number topped estimates it was still below the +250,000 jobs needed each month to lower the unemployment rate. Several large U.S. retailers reported stronger than expected same store sales in June which bodes well for the economic recovery. The Labor Department said weekly jobless claims fell by -14,000 to 418,000 which is still above the dreaded 400,000 mark. However, a lower reading for the week bodes well for the overall employment situation. Before Friday’s open, the Labor Department said U.S. employers only added +18,000 new jobs last month which was sharply lower than the Street’s forecast for a gain of +105,000. The unemployment rate rose to +9.2%, up from last month’s reading of +9.1%. Equally worrisome, last month’s already low reading of +54,000 was lowered to +25,000.

Market Outlook- Market In A Confirmed Uptrend:

The last week of June’s strong action suggests the market is back in a confirmed rally. As our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the action remains bullish until the major averages and leading stocks violate their respective 50 DMA lines. Until then, the market deserves the bullish benefit of the doubt. Barring some unforeseen event, investors will likely be focusing on the jobs market this week and then spend the rest of the month focusing on the latest round of economic and Q2 earnings data. If you are looking for specific help navigating this market, please contact us for more information.
 

Stock Market Research?

Global Macro Research?

Want To Follow Trends?

Learn How We Can Help You!

 

Similar Posts

  • Gains On Lighter Volume Reveal Lackluster Buying Demand

    The major averages rallied on Wednesday, sending the benchmark S&P 500 Index to a fresh 2009 high on positive economic and political data. However, volume, a critical component of institutional demand, was reported lower on both major exchanges. That signaled that large institutions were not aggressively buying stocks.

  • Equity Markets Starting To Show Signs Of Weakness

    Friday, February 22, 2013 Stock Market Commentary: Finally, after 8-strong positive weeks for the S&P 500 we began to see signs of distribution, especially in overseas markets. As you know by now, from my point of view, the primary two catalysts that sent stocks higher in recent months are: The Global Stability Put (GSP, the latest buzz word…

  • 2nd Half Of 2011 Begins!

    Market Outlook- Market In A Correction:
    The market is back in a correction after another failed follow-through day on Tuesday, June 21, 2011. Now that we are back in a correction, defense remains the best offense. The next level of support for the major averages is their respective 200 DMA lines and then their March lows. The next level of resistance for the major averages is their respective 50 DMA lines. Trade accordingly.
    For those of you that are interested, the S&P 500 hit a new 2011 high on May 2, 2011. Two days later, on Wednesday, May 4, 2011, we turned cautious and said “The Rally Was Under Pressure” (read here). Then on Monday, 5.23.11, we changed our outlook to “Market In A Correction” (read here). On Monday, June 6, 2011 we pointed out that the S&P 500 violated its 9-month upward trendline (read here) and reiterated our cautious stance. On June 21, 2011 we changed our Market Outlook to a “Confirmed Rally” after the latest FTD was produced. Two days later, on Thursday, June 23, 2011, our outlook changed to “Market In A Correction”after the market sold off hard on renewed economic woes. If you are looking for specific help navigating this market, please contact us for more information.
    Stock Market Research?
    Global Macro Research?
    Want To Follow Trends?
    Learn How We Can Help You!

  • Bears Are Getting Stronger!

    Market Action- Rally Under Pressure
    The current rally which began with the Thursday, March 24, 2011 FTD is now under pressure as the Nasdaq composite & Nasdaq 100 both closed below their respective 50 DMA lines. Remaining objective, it is bullish to see the other popular averages all trading near to slightly above their respective 50 DMA lines. However, if that important level is breached, then lower, not higher prices, likely lie ahead. If you are looking for specific help navigating this market, please contact us for more information.
    Have you seen the “Wise Money Library”?
    Now, All In One Place, A Collection Of Strategies, Techniques and
    Resources That Professional Traders and Investors Use
    Have a Look: www.WiseMoneyLibrary.com

  • Stocks Plunge To Fresh 2011 Lows!

    Market Outlook- Market In A Correction:
    The major U.S. averages are back in a “correction” as they continue to flirt with their 2011 lows. Allow us to be clear: If the 2011 lows are breached, we will likely see another leg down commence. Please, trade accordingly! Several high ranked leaders violated their respective 50 DMA lines in late September which bodes poorly for the bulls and suggests the bears are getting stronger. The latest follow-through day (FTD) which began on August 23, 2011 has officially ended which means we will begin “counting” days before a new rally can be confirmed. In addition, it is important to note that the bears remain in control of this market until the major averages trade above their longer and shorter term moving averages (50 and 200 DMA lines). Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. . If you are looking for specific help navigating this market, please contact us for more information.
    Save Over 50%!
    Limited-Time Offer!
    www.FindLeadingStocks.com
    Coming Up This Week:
    TUESDAY: Factory orders, Bernanke speaks, Apple iPhone event; Earnings from Yum Brands
    WEDNESDAY: Weekly mortgage apps, Challenger job-cut report, ADP employment report, IS non-mfg index, oil inventories; Earnings from Costco, Monsanto, Marriott
    THURSDAY: BoE announcement, ECB announcement, jobless claims, chain-store sales; Earnings from Constellation Brands
    FRIDAY: Non-farm payroll, wholesale trade, consumer credit, Sprint’s 4G plans unveiled
    Source: CNBC.com