This remains a frothy market - regardless of whether the wild process continues past May or breaks. Incredibly, despite no late fade until the final moments, little progress occurred after the futures lunged at Friday's open; as logic for remaining bullish is essentially what we expected Thursday,'if' Jobs data was around 200,000 new NFP (key to the report was a downward revision of 85,000 for March, and that may happen to this report too).
Also; the vast majority of new jobs were 'part-time' while US total jobless is at record levels. This seemingly negative tone was not unknown (as we said, the Fed spins it as favorable recovery to give 'cover' for extracting policy from the corner they painted themselves into). What you had was what we discussed Thursday before the report: a 'ramp' higher if numbers were as they were; a rationalization that will keep the Fed from firming up.
Of course the Fed can do other things; like hike margin requirements so as to dampen market enthusiasm without the typical response of higher rates. Even that, however, can't be done in a vacuum; (as explored with members).
In sum: confidence levels for an S&P break are irrelevant; this is primarily technical at this point; more so than (redacted). In the week ahead Retail figures may further emphasize the slowing; levels technically referenced are clear.
Our guideline focus definitely leans to favoring fading rallies over buying dips; though we've done a bit of both these past two weeks. Over the weekend entirely flat S&P guidelines; with fingers cross we don’t get a ’surprise’ Greek Exit (and just market ’shock’ before Monday’s opening). It is a market that can try to extend briefly; but has ‘Flash Crash’ risk galore.
Daily action - we won't lament the trading week; while we do lament Friday's afternoon resilience. An excellent week overall, featuring not less than 30 handles S&P gain (some in both directions).
The frequency of drastic shifts is a sign of low liquidity; not available funds as are sloshing around the world; but funds willing to go into markets.
Many leading stocks; including Apple, Google, Facebook, Disney, Starbucks, etc., were in 'ranges' for several months; then rallied ahead of earnings; and sold-off thereafter. Many (not all) are at-risk of dropping 'back' into the ranges that prevailed before the pre-earnings blow-offs. (More.)
Bottom-line: despite S&P threatening new highs yet again; the market's internal top (redacted); this is not a new development. To break (more).
Treacherous times. The process evolves. Join us during May's ‘special’ in an historic saga for a market promising more trading swings just ahead.
Enjoy your weekend!
Gene
Gene Inger
www.ingerletter.com
