The market direction outlook for today was for a sideways movement but a higher close. The movement continues to be to the upside. The advance and decline ratio still is favoring advancers and intraday 408 new highs were made versus just 68 new lows. This means for those investors with underwater options or stocks, their positions may improve and offer opportunities for better positioning.
Unemployment and Market Direction
The unemployment numbers this morning caught many investors by surprise. I didn’t find these as surprising as past months. The Weekly Initial Unemployment Insurance Claims has been rising. The creating of 148,000 jobs which was still fewer than expected (expected 180,000), still shows that the economy is continuing to grow. The belief this morning though was that there is no way the Fed could start tapering this year. That propelled the markets higher and set another new high in the S&P 500 and IWM and new 13 year highs for the NASDAQ. The Dow too jumped over 100 points.
But the Fed is looking beyond just the unemployment numbers. They are also looking to see what the percentage of people who have left the work force is. That percentage, they know can contribute to what appears to be declining unemployment. At the same time it can also contribute to better employment in coming reports. The more people employed and the fewer who are looking for work means that the economy is doing well and the Fed can consider tapering.
Gold Moving Higher, Dollar Lower
The employment numbers pushed the dollar lower which helped to drive Gold higher. This pushed my favorite gold stock up over 4.5% as it now approaches $20.00.
Market Direction Outlook Intraday
The 1 minute S&P 500 intraday chart is below. You can see the big jump open on the employment news. Then around 11:30 the test for support and then basically the market has stayed sideways. The problem remains an incredibly overbought market which will rest at some point. Yesterday saw some movement lower in many stocks and a sideways close. Today we saw the jump and then a sideways day.
Market Direction Outlook Into The Close
Into the close I believe the stronger outlook is for the market to pull back a bit from its morning highs. The rally was a bit overdone and talk on the media about the market setting itself up to “drop like a stone” to quote John Hussman, will help to keep investors nervous and that is what we need. The frothiness of the market direction up is worrisome but until we see any evidence to the downside the outlook remains positive.
Personally I think the market may pull back a bit from being so overbought, but it will be a buying opportunity to go into the end of the year.
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