Happy Good Friday, everyone. This is going to be a very light holiday weekend, content-wise, but I wanted to chime in on the only meaningful economic data point of the week, which was the monthly jobs report, released earlier this morning.
The data that came out was bullish across the board. Hourly earnings weakened, diminishing inflation concerns. Jobs growth was three times stronger than anticipated. Finally, the overall unemployment rate dipped from 4.4% to 4.3%. Three for three positive signs.
The market reacted exactly as you would anticipate, which is that bonds ripped higher as did equities……….for about five seconds. For whatever reason (and I welcome it, regardless of the rationale), the positive reaction was exceptionally short-lived, even during whisper-thin holiday trading. Here the bonds popped and dropped:
Likewise, all the equity futures behaved roughly like the /ES, exploding higher and then immediately giving up their gains and ending the attenuated session down about 18 points.
What’s remarkably important, I believe, is what is going on with the Fibonacci retracement sequence, which I’ve drawn from the April 9th low of last year (Liberation Day TACO) up to the tippity-top peak of the /ES.
Over the course of the shortened trading week, the /ES played hopscotch with the 23.6% level of this bad boy, and presently it represents crucial support which will be resolved by whatever lunacy takes place Monday/early Tuesday. (Remember, the latest so-called deadline is the evening of April 6th!)
Looking at the big picture, you can see how the bounce we experienced over the past week ripped the /ES from almost tagging the lower level to bouncing just above the current blue one.
The cash S&P 500 reflects this same setup, with the ultimate low (arrow 4 in my 4-arrow “Simple Plan”) being at something like 6200 or thereabouts.
Getting back to the /ES, the bears’ best friend right now is that absolutely Himalayan mountain range of overhead supply. The bulls believe that once the Iran unpleasantness is out of the way, it’ll be Lifetime Highs time again. Errr, no, I think not.
In my estimation, we have entered an entirely new kind of market, and one which is not predicated on Middle East hostilities (although they help). These counter-trend rallies have been going on for MONTHS, my friends, and with every push to yet another red circle, all we hear about is Happy Days Are Here Again until there’s some new reason for people to start converting shares into cash.
Considering the unchecked mayhem going on these days, I am keeping things reasonable. My commitment level in my short portfolios is about 80%, and I have no, I say again, no large positions. These shorts are instead spread among 27 lovingly selected charts.
I will be happy to get aggressive again once there is some short-term clarity about what in the name of my personal savior Jesus Christ is going on out there.
And, with that, I again bid you peace.
