Despite yesterday’s modest strength, we’ve got more downside on the
open this morning as the markets were hit with some weaker than expected
economic data.
ADP’s payroll change came in a little light at 158K when analysts
were expecting 185K. Initial jobless claims came in slightly higher than
expected at 248K when analysts were expecting 243K. All fairly normal
these days, as it seems the country is approaching what economists
consider to be full employment levels, but there’s no question
underlying market technicals continue to be the main driver.
It’s just tough for these markets to instill confidence lately with tech continuing to lag the major averages. So, to re-iterate our recent analysis, we’re still looking for roughly 5,900 on the NASDAQ Composite. It would be a welcomed haircut though – one we’ve been anticipating for a while now.
Oil and gold were up modestly on the open, but no real change from our previous analysis there – we’re still convinced both are headed lower at some point over the next several days – despite any short-term strength. Assuming they do, they’d be getting closer and closer to levels we’ll ultimately find attractive.
Let’s just hope the major averages also find their way lower, because if it all coincides together, it could put the markets in a very strong position to rally heading into the upcoming earnings season, which is set to kick off here around mid-month.
We should also point out bonds have moved dramatically lower in recent days, something one might not have expected with stocks continuing to look suspect. However, that will change, because based on what we’re seeing in the bond markets, the recent selloff could merely be one that sets the stage for a reversal in bonds.
Provided here is a weekly chart of TLT, the primary ETF tracking the 20+ year treasury bond. As you can see, despite the recent move lower, the ETF has found itself below its 3X3 DMA (blue line) on two previous occasions, only to rally off those levels. And, if that ends up being the case this time around as well, we’re likely looking at a move to roughly $133 and change before bond investors could be in a position to start moving money back into stocks again.
The bottom line is stocks still appear suspect for the time being, despite the strength that continues to show up from time-to-time lately. Even the S&P 500′s recent rounding top pattern continues to suggest these markets want to work their way lower – and if it persists, we’re probably going to end up seeing the index down just below 2,400 on this daily chart here before the index could be in a position to stage another reversal back to the upside.
It’s just tough for these markets to instill confidence lately with tech continuing to lag the major averages. So, to re-iterate our recent analysis, we’re still looking for roughly 5,900 on the NASDAQ Composite. It would be a welcomed haircut though – one we’ve been anticipating for a while now.
Oil and gold were up modestly on the open, but no real change from our previous analysis there – we’re still convinced both are headed lower at some point over the next several days – despite any short-term strength. Assuming they do, they’d be getting closer and closer to levels we’ll ultimately find attractive.
Let’s just hope the major averages also find their way lower, because if it all coincides together, it could put the markets in a very strong position to rally heading into the upcoming earnings season, which is set to kick off here around mid-month.
We should also point out bonds have moved dramatically lower in recent days, something one might not have expected with stocks continuing to look suspect. However, that will change, because based on what we’re seeing in the bond markets, the recent selloff could merely be one that sets the stage for a reversal in bonds.
Provided here is a weekly chart of TLT, the primary ETF tracking the 20+ year treasury bond. As you can see, despite the recent move lower, the ETF has found itself below its 3X3 DMA (blue line) on two previous occasions, only to rally off those levels. And, if that ends up being the case this time around as well, we’re likely looking at a move to roughly $133 and change before bond investors could be in a position to start moving money back into stocks again.
The bottom line is stocks still appear suspect for the time being, despite the strength that continues to show up from time-to-time lately. Even the S&P 500′s recent rounding top pattern continues to suggest these markets want to work their way lower – and if it persists, we’re probably going to end up seeing the index down just below 2,400 on this daily chart here before the index could be in a position to stage another reversal back to the upside.
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