Smoother than a gentle breeze

Flowin' through my mind with ease

Soft as can be, well

For the Love of You -The Isley Brothers

Yesterday, all the major indices lurched into the plus column right before the closing bell, but it wasn’t a pretty session. Welcome to the summer doldrums, but don’t even think about ducking out. These sideways sessions are still chock-full of big-time winners. Moreover, there is an old saying that you should never short a dull market for a reason.

As for the week, it stands to reason things will get a lot more interesting as we get closer to Friday morning and the government’s jobs report.  We’ll get the ADP report this morning.

Safety & Profits

Investors are back to that feeling of having it all: safety and making big money. They are piling back into Technology, Communication Services, and Consumer Discretionary names.

Chips keep rocking with four of the top ten winners, including the top percentage gainer, Qorvo (QRVO), while consumer names gaining included Nike (NKE) and Etsy (ETSY).

S&P 500 Index	+0.03%
Communication Services XLC		-0.54%
Consumer Discretionary XLY	+0.25%
Consumer Staples XLP		-0.44%
Energy XLE		-0.49%
Financials XLF		-0.35%
Health Care XLV	+0.11%
Industrials XLI		-0.20%
Materials XLB		-0.05%
Real Estate XLRE		-0.07%
Technology XLK	+0.73%
Utilities XLU		-1.62%

S&P 500 Heat Map

The S&P 500 Heat Map is adjusted for component weights, which is why Microsoft (MSFT) and Apple (AAPL) take up damn near half the map. I’m only slightly facetious.

Volume Withering

In addition to the fact that there were so many declining stocks in yesterday’s session, the volume dried up big time. I get there are extenuating factors, like a lot of traders simply getting an early start on July 4^th festivities. Still, I want to see volume climb higher on a strong-up session.

Under the Hood

Market breadth wasn’t great on any exchange, especially for the NASDAQ Composite, which climbed off the canvas early in the session to trade higher. But once again, it reflects the strength of those mega-cap, mega-growth stocks.

Market Breadth	NYSE	NASDAQ
Advancing	1,498	1,716
Declining	1,779	2,595
52 Week High	148	153
52 Week Low	7	38
Up Volume	1.38B	2.65B
Down Volume	2.34B	2.10B

Another Yellow Flag: Transportation Stocks Spinning Wheels

I’ve already written about the need for transportation names to get back on track. Since then, the spin-out has gotten worse with the iShares Transportation Average (IYT) Index making a series of lower highs. 

Consumer Confidence

It’s really amazing to see the speed of improvement in consumer confidence. Look at the difference in jobs plentiful versus hard to get. It is no wonder people are so cocky that they aren’t even looking for work.

Present Situation:

Consumers’ appraisal of current business conditions improved in June.

• 24.5% of consumers said business conditions are “good,” up from 19.9%.
• 19.5% of consumers claimed business conditions are “bad,” down from 20.6%.

Consumers’ assessment of the labor market also improved.

• 54.4% of consumers said jobs are “plentiful,” up from 48.5%.
• 10.9% of consumers claimed jobs are “hard to get,” down from 11.6%.

But there is growing concern about where the nation will be six months from now.

Portfolio Approach

There were no changes to the Hotline Model Portfolio yesterday. 

Today’s Session

The ADP report just came in at 692,000 which is right there with consensus estimates for the BLS employment report that will be out Friday morning.  The street was looking for 600,000 so this is a beat Even though ADP has been significantly higher than BLS the last couple of months, there is a sense a lot of folks will sharpen their pencils and go back to the drawing board and edge their estimates higher.

Interestingly, equity futures got a little weaker, as major indices were trying to move into the green.

This gets back to the debate over how the street would react to a number above the current consensus number of 700,000.  The great workers’ paradise has been met with a great workers’ strike, so I continue to root for a stronger number.

 Message from Bond Market

The ten-year yield continues to edge lower.  It continues to say inflation is not going to be a problem longer term.

The countdown has begun to the jobs report, and that means lots of angst, and that could create selling pressure.  I’m surprised we haven’t had a 1.0% selloff day already.

None of this impacts fundamental stories but emotions could dictate direction over next 48 hours.

Comments

Thank you Charles --- some things just make laugh -- (1% sell off already LOL) -- my surprise is you did not include the word "feelings with emotions" Thanks & have a Great Independence Day. John Cowger on 6/30/2021 10:21:04 AM

What are these stay at home non-workers going to do when the government dole-out stops. Do they ever think ahead? Lorin K on 6/30/2021 1:35:13 PM

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