Today’s US S&P 500 Action May Signal Market Top

Today’s US S&P 500 Action May Signal Market Top

Today’s US S&P 500 Action May Signal Market Top


US economy’s ill health possibly having been overstated, plus the Dovish talk from the Fed combined Friday drive the S&P 500 Index above its 21 May 2015 all time high close.

Friday’s capped an 8-day rebound of more than 6% that restored $1.4-T of market capitalization to US shares that was erased in the aftermath of the UK vote to leave the EU.

The S&P 500 rose more than 1% for the 4th time in 2 weeks, after stronger June payroll growth calmed fears sown by May’s grim number.

Banks, technology and retailers were among the biggest contributors to the rally.

The S&P 500 rose 1.6% on the day before closing less than 2 pts below the may 2015 all time high.

Starting with a report Wednesday showing service providers expanded in June at the fastest pace in 7 months, and continuing with FOMC mins that indicated less urgency in the need to raise interest rates, investors have been treated to enough good news to put the Brexit dive in the scrapbook

The S&P 500 added 1.5% to 2,129.70 closing at its highest since 21 May 2015, after briefly exceeding the record of 2,130.82.

Friday’s official employment situation report showed America’s job market came back to life after a 2-month lull, as payrolls climbed by the most since October, exceeding the highest estimate in a survey.

The jobless rate rose to 4.9% as more people entered the labor force, while wages advanced less than projected. Revisions to prior reports subtracted a total of 6,000 jobs to overall payrolls in the prior 2 months.

The valuations edge held by stocks over bonds has gotten extreme of late as government debt rallied, with the S&P 500’s EPS climbing above 5%, or about 3.7% above the 10-year US Treasury rate.

That gap is wider than any point during the Y’s 2002-2007 rally.

The jobs data will help reassure Fed policy makers that companies are staying the course on hiring in the face of weaker profits and overseas developments such as Britain’s vote to leave the EU.

May’s weak US employment report and the US’s vote to ankle the EU erased any wagers on a Fed rate increase this month, after probabilities for a move were 55% at the beginning of June.

Despite the rebound in job gains last month, traders are pricing in less than even odds of a boost in fed funds until December 2017.

Alcoa Inc. (NYSE:AA) unofficially kicks off Q-2 earnings season next week. Analysts predict profits will drop 5.7% at S&P 500 firms, which would make it the 5th straight Quarterly decline, the longest streak since Y 2009.

In Friday’s trading, all of the S&P 500’s 10 sectors rose, with financial, raw-materials, industrial and consumer discretionary companies adding more than 1.7%.

Friday, the US major market stock indexes finished at:

Volume: Trade on the NYSE came in at about 906-M/shares.

  • S&P 500 +4.2% YTD
  • DJIA +4.1% YTD
  • Russell 2000 +3.6% YTD
  • NAS Comp-1.0% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.33) Neutral (0.23) Very Bullish (0.50) Bullish (0.25)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Neutral (0.23) Bullish (0.29) Bullish (0.27) Neutral (0.14)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.45) Neutral (0.23) Very Bullish (0.65) Bullish (0.47)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.30) Neutral (-0.19) Bearish (-0.33) Bearish (-0.38)

Stay tuned…



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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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