The recent jobs report came in less than expected, with analysts' estimates running anywhere from 250,000 to 500,000 new jobs created. Disappointingly, employers added only 194,000 jobs in September.
Although the numbers mean slower progress towards the 2-3% unemployment goal, will investors take a cautious note? Possibly, but only if the market loses support from its biggest fan, the Fed.
With the market heavily supported from the Fed's bond-buying program, investors continue to look for upward movement, even though the economy faces slower-than-expected economic growth from supply-chain and labor bottlenecks. This leaves the market at a pivotal point, as the Fed looks to scale back its bond-buying program while supply chain and weak jobs growth point to increasing inflation.
This also aligns with the current market technicals. As seen in the above charts, the Dow Jones (DIA), S&P 500 (SPY) and Nasdaq 100 (QQQ) all have overhead resistance from the 50-day moving average, while the Russell 2000 (IWM) continues to have trouble staying over $225. Therefore, if the market is going to push higher from its recent bounce, it will take more than delaying the debt ceiling to keep the market happy.
On a higher note, even with current issues, U.S demand for goods looks to be growing if the transportation sector (IYT) holds over its 200 and 50-day moving average. Along with a continued growth in U.S manufacturing, if the market becomes rangebound or more volatile, at least core economic fundamentals are heading in the right direction.
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On this week's edition of StockCharts TV's Mish's Market Minute, following a big correction in the market, Mish covers the intermarket relationships that you can look at to find oversold stocks for potential buys with minimal risk.
On the Friday, October 8 edition of StockCharts TV's Your Daily Five, Mish explains how she likes to have a group of stocks from all asset classes to pick from so that, regardless of what the market does, she has a choice. For example, if it decides to react to inflationary pressures, she has picks that can do well in that. Or, in the case of some easy policy by the Fed, we have some good picks for that as well.
- S&P 500 (SPY): Resistance 442 area.
- Russell 2000 (IWM): Resistance 225.
- Dow (DIA): 350 resistance.
- Nasdaq (QQQ): 366 level to clear.
- KRE (Regional Banks): Needs to hold over 70.
- SMH (Semiconductors): 248.745 support area.
- IYT (Transportation): Needs to stay over 251.
- IBB (Biotechnology): 153.38 support.
- XRT (Retail): 89.15 support the 200-DMA.
Assistant Director of Trading Research and Education