“The trend is your friend until the end.” The trend in the S&P 500 has been extremely Bullish over the past several wks, and the market sees it continuing.”–Paul Ebeling
What happened last week
Friday, stocks fell at the open, recover with a big, final-hr short covering surge.
Since Friday was NFPs Friday, shorts had to cover some stocks in the event of a strong report after a week of selling.
The initial jobless claims figures were solid and foretold a strong jobs report. So, we decided to see how the market liked or disliked it.
After roughly a week of selling on the NAS Comp and PHLX Semiconductor Sector (SOX) and a rather calm pullback on the NYSE indices, stocks were close to flat ahead of the open. It looked as if they might present a calm session Thursday ahead of Friday’s April NFPs report.
Thursday, the S&P 500 marked the 20-Day EMA, the NAS Comp marked the 50-Day SMA and for the SOX, this was the 78% Fibo retracement and the S&P 400 tapped the 20-Day EMA again.
The DJIA (Very Bullish) was never in danger all wk.
What to expect this week
The inflation theme should be in play throughout the week for a variety of reasons. In particular, the Consumer Price Index for April will be released on Wednesday and will be followed on Thursday by the Producer Price Index for April.
Aside from those reports, there is a constant stream of corporate commentary, as well as plenty of anecdotal reports, calling attention to sizable price increases across a range of raw materials, products, and services.
The Treasury market still looks to be on a tight leash held by the Fed and its prevailing view that the price increases should be transitory. The benchmark10-yr T-Note yield is unchanged this morning at 1.58% and down from 1.74% at the end of March.
The persistence of low interest rates has been a constant support factor for the broader market, enabling a buy-on-weakness attitude that has yet to be humbled.
Have a healthy week, Keep the Faith!