The indices plunged pre-market when the jobs report came out. It is the worst job growth in 6 years adding only 38k jobs versus an expectation of 160k. Previous 2-months were revised downward. The dollar plunged while bonds and gold jumped on the news. The indices continued trading down on market open and bottomed in the first hour before recovering and ended the day slightly lower from previous day close. The indices continue to hover near their all-time high.
On the weekly charts, the indices are at indecision levels and the coming weeks will tell us whether this market will continue upward or start to trend downward.
This market continues to show strength all because of the low rate environment created by the FED for the past 7 years. Companies continue to take advantage of the low rates to borrow money to fund share buybacks and M&A deals. Earnings for majority of the S&P 500 companies are on the decline for the last three quarters. It is these activities that is propping up the market. When quantitative easing was around, it was the fuel that blasted the market upwards.
Will they, won’t they? The FED is supposed to be data dependent and especially with unemployment below 5%, that was supposed to be the trigger point for a rate hike. The unemployment is now below 5% but the FED is still holding off for a further rate hike.
The following commentaries are based on the weekly charts.
Indices
Dow Transportation has been unable to break above its 50 SMA which continues to slope downward. It closed for the week with a spinning top doji candle. Momentum remains upwards. Volumetric buying pressure is at 89.4%. The index is in a monthly Squeeze.
Dow Industrial closed for the week with a spinning top doji candle above its 3EMA and all its moving averages. Momentum remains upward. Volumetric buying pressure is at 94.6%.
Russell 2000 closed for the week with a small spinning top doji candle above its 50 SMA in an uptrend. Volumetric buying pressure is at 100%. The index is in a monthly Squeeze.
Nasdaq 100 closed for the week with a small doji candle above its 3 EMA in an uptrend. Volumetric buying pressure is at 95.1%. The Nasdaq 100 is in a monthly Squeeze.
S&P 500 closed for the week with a small doji candle. Volumetric buying pressure is at 99.4%. The S&P 500 has exited its daily Squeeze and is still in a monthly Squeeze.
Commodities
Oil (/CL) futures closed at $48.90 per barrel. Its weekly chart shows it to be in an uptrend and closed with a small doji candle above its 3 EMA and 50 SMA. Buying pressure is at 100%.
Gold (/GC) futures closed for the week at $1246.50 an ounce with a big bullish marubozu candle above its 21 EMA. Momentum remains upward. Volumetric buying pressure is at 32.8%
Silver (/SI) futures closed at $16.440 an ounce with a small bullish candle below its 8 EMA but above its 21 EMA. Momentum remains upward. Volumetric buying pressure is at 69.1%.
Agriculture ETF (DBA) closed at 22.07 with a bullish marubozu candle above its 50 SMA in a steady uptrend. Momentum remains upward. Volumetric buying pressure is at 100%.
Commodities (DBC) ETF closed at 14.99 with a small bullish hammer candle in a continuing uptrend. It is now trading above its weekly 50 SMA. Momentum remains upward. Volumetric buying pressure is at 100%.
Bonds
High Yield bonds ETF (HYG) closed at 83.51 with a hammer candle above its 50 SMA. Weekly momentum remains upward. Buying pressure is at 100%.
Bonds ETF (TLT) closed up for the week at 133.23 with a bullish marubozu candle above its 8 EMA and 21 EMA. It is in a weekly and monthly Squeezes. Momentum remains upward and buying pressure at 100%.
Currencies
On the weekly chart, the dollar index closed down for the week at 93.880 with a bearish marubozu candle. Momentum remains downward. Buying pressure is at 42.6%. Momentum remains downward.
Relative Strength – Sectors
On a monthly lookback, the ETFs outperforming the S&P 500 are XLU, XLV, XLK, XLB and XLE respectively.
On a 3-month lookback, the relative strength order are XLE, XLB, XLV, XLF and XLU.
Market Internals
Vix closed at 13.47. Vix futures is at 14.725. Volatility carries on its down trend. Skew is at 125.04. Market sentiment remains bullish. Market breadth continues to slope upward. Volumetric accumulation/distribution is sloping upward as well.
The Week Ahead
This market continues to astound the bears. It continue to exhibit strength and even in the face of a sell-off, it is seen as a buying opportunity and the indices are pushed back up by the bulls. Market internals continue to show strength and any breakout are more likely to be upward.
To YOUR wealth!
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3 June 2016 – Poor jobs report surprises
The indices plunged pre-market when the jobs report came out. It is the worst job growth in 6 years adding only 38k jobs versus an expectation of 160k. Previous 2-months were revised downward. The dollar plunged while bonds and gold jumped on the news. The indices continued trading down on market open and bottomed in the first hour before recovering and ended the day slightly lower from previous day close. The indices continue to hover near their all-time high.
On the weekly charts, the indices are at indecision levels and the coming weeks will tell us whether this market will continue upward or start to trend downward.
This market continues to show strength all because of the low rate environment created by the FED for the past 7 years. Companies continue to take advantage of the low rates to borrow money to fund share buybacks and M&A deals. Earnings for majority of the S&P 500 companies are on the decline for the last three quarters. It is these activities that is propping up the market. When quantitative easing was around, it was the fuel that blasted the market upwards.
Will they, won’t they? The FED is supposed to be data dependent and especially with unemployment below 5%, that was supposed to be the trigger point for a rate hike. The unemployment is now below 5% but the FED is still holding off for a further rate hike.
The following commentaries are based on the weekly charts.
Indices
Dow Transportation has been unable to break above its 50 SMA which continues to slope downward. It closed for the week with a spinning top doji candle. Momentum remains upwards. Volumetric buying pressure is at 89.4%. The index is in a monthly Squeeze.
Dow Industrial closed for the week with a spinning top doji candle above its 3EMA and all its moving averages. Momentum remains upward. Volumetric buying pressure is at 94.6%.
Russell 2000 closed for the week with a small spinning top doji candle above its 50 SMA in an uptrend. Volumetric buying pressure is at 100%. The index is in a monthly Squeeze.
Nasdaq 100 closed for the week with a small doji candle above its 3 EMA in an uptrend. Volumetric buying pressure is at 95.1%. The Nasdaq 100 is in a monthly Squeeze.
S&P 500 closed for the week with a small doji candle. Volumetric buying pressure is at 99.4%. The S&P 500 has exited its daily Squeeze and is still in a monthly Squeeze.
Commodities
Oil (/CL) futures closed at $48.90 per barrel. Its weekly chart shows it to be in an uptrend and closed with a small doji candle above its 3 EMA and 50 SMA. Buying pressure is at 100%.
Gold (/GC) futures closed for the week at $1246.50 an ounce with a big bullish marubozu candle above its 21 EMA. Momentum remains upward. Volumetric buying pressure is at 32.8%
Silver (/SI) futures closed at $16.440 an ounce with a small bullish candle below its 8 EMA but above its 21 EMA. Momentum remains upward. Volumetric buying pressure is at 69.1%.
Agriculture ETF (DBA) closed at 22.07 with a bullish marubozu candle above its 50 SMA in a steady uptrend. Momentum remains upward. Volumetric buying pressure is at 100%.
Commodities (DBC) ETF closed at 14.99 with a small bullish hammer candle in a continuing uptrend. It is now trading above its weekly 50 SMA. Momentum remains upward. Volumetric buying pressure is at 100%.
Bonds
High Yield bonds ETF (HYG) closed at 83.51 with a hammer candle above its 50 SMA. Weekly momentum remains upward. Buying pressure is at 100%.
Bonds ETF (TLT) closed up for the week at 133.23 with a bullish marubozu candle above its 8 EMA and 21 EMA. It is in a weekly and monthly Squeezes. Momentum remains upward and buying pressure at 100%.
Currencies
On the weekly chart, the dollar index closed down for the week at 93.880 with a bearish marubozu candle. Momentum remains downward. Buying pressure is at 42.6%. Momentum remains downward.
Relative Strength – Sectors
On a monthly lookback, the ETFs outperforming the S&P 500 are XLU, XLV, XLK, XLB and XLE respectively.
On a 3-month lookback, the relative strength order are XLE, XLB, XLV, XLF and XLU.
Market Internals
Vix closed at 13.47. Vix futures is at 14.725. Volatility carries on its down trend. Skew is at 125.04. Market sentiment remains bullish. Market breadth continues to slope upward. Volumetric accumulation/distribution is sloping upward as well.
The Week Ahead
This market continues to astound the bears. It continue to exhibit strength and even in the face of a sell-off, it is seen as a buying opportunity and the indices are pushed back up by the bulls. Market internals continue to show strength and any breakout are more likely to be upward.
To YOUR wealth!
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