Friday's jobs report caused some minor profit-taking in major stock indexes, but not enough to alter the current uptrend. The chart below shows the S&P 500 dropping slightly Wednesday through Friday (but closing up for the week). I've pointed out that stocks are up against chart resistance along their summer highs and in a short-term overbought condition. That could lead to some backing and filling like we saw this week, but nothing too serious. The longer range trend remains positive. Initial chart support for the SPX is at 2060 which coincides with its rising 200-day moving average. Friday's mixed results for major stock indexes, however, masked big sector rotations beneath the surface. That was due mainly to the big jump in bond yields and its effect on various stock groups. It helped banks, brokers, and insurers, but hurt utilities, REITS, and dividend-paying consumer staples. The resulting jump in the U.S. dollar also had a bearish effect on gold miners and other commodity stocks. The rising dollar may also have contributed to this week's jump in small cap stocks which are starting to play catch up.
Don't miss what else John had to say today! StockCharts members can click on the "Market Message" tab on our website to see John's thoughts on what rising rates (and the surging US dollar) will do to the markets.