Yesterday was another good day, as more fence-sitters took the plunge - or at least put a toe in the water:

• S&P 500: +1.50%
• NDX: +2.16%
• RUT: +2.43%
• DJI: +1.12%
• WTI: +4.26%
• BTC: +5.29%

Everything was up, including bond yields, which made for a lot of theories. Perhaps the best came from the DailyFX, which points out that since the 1900s, this time of the year has generally been the best week. The S&P 500 has been up for four straight days for the fourth time this year. The last five-day streak was last November.

DailyFX

Market Breadth

Finally, there’s some glimmer of hope, but let’s face it; those new highs were very paltry and still below lows.

Market Breadth	NYSE	NASDAQ
Advancers	2,494	3,457
Decliners	752	1,126
New Highs	11	24
New Lows	59	119
Up Volume	3.71 billion	3.88 billion
Down Volume	427.62 million	798.04 million

It looks as if investors are eschewing hot stocks instead of focusing on sectors with large components that are below key moving averages.

 Heat Map

The Heat Map underscores all the action is focused on the most beaten-down sectors, which now includes Energy (XLE) after a 28% swoon from the 52-week high in a blink of an eye.

It’s a pretty good one-two punch when mega-cap names are rocking and the XLE is rocking at the same time.

Chart Watch

The Russell 1000 Growth ETF is taking the lead from value, but the big test happens right here.  Continued momentum could mean closing that gap (circle).

Keep an eye on the NASDAQ-100, which is at its 50-day moving average.

Big Jobs Report

The Street is looking for 268,000 jobs added last month, down from the 390,000 in May.

Wall Street Range:

• Danske Bank: 400k
• Amherst Pierpont: 375k
• TD: 325k
• Bank of America: 325k
• MS: 325k
• Jefferies: 320k
• Soc-Gen: 310k
• Uni-credit: 300k
• Citi: 290k
• Nomura: 290k
• Barclays: 275k
• CS: 275k
• JPM: 275k
• Goldman Sachs: 250k
• HSBC: 250k
• Wells Fargo: 240k
• BNP Paribas: 230k
• DB: 225k
• UBS: 225k
• Visa: 220k
• Mizuho: 200k
• Pictet: 90k

Other estimates:

• Average hourly wages from a year ago +5.0 from +5.2%
• Average hourly wages from a month ago +0.3% from +0.3%
• Hours worked weekly flat at 34.6 from 34.6
• Unemployment rate 3.6 from 3.6
• Participation 62.4 from 62.3

This number is super important as anecdotal evidence is mounting that the super-strong jobs market might be losing steam faster than assumed. If that’s the case, it could slow down the grand ambitions of Jay Powell to be the next Paul Volcker.

In other words, the Fed won’t destroy the economy in the noble effort to save it. Instead, it’s going to be a nailbiter.

Portfolio Approach

There are no sector weighting changes this morning in our Hotline Model Portfolio.

Today’s Session

The American economy added 372K jobs in June, coming in higher than the consensus of 268,000.

• Professional and business services 74,000
• Leisure and hospitality 67,000
• Health care and social services 77,800
• Transportation 35,500

But there are some areas of concern, including the 353,000 that have left labor force and household survey was -315,000.  This might explain why bond yields initially spiked, but then settled down.

Comments

The strong job report just gives the Fed one more reason to raise rates. Unless what they've been stating is another big lie??? That they are firmly committed to continue raising rates until inflation trajectory is once again clearly approaching their 2% target.....Yes, 2%. With inflation running 8 1/2% or more excluding housing and gas (energy/oil), this can not be done with this Fed without a recession. Many, myself included, feel the official inflation number, currently 8.6% is was understated because of the exclusion of housing, energy, and food. Some say the true number is about 16%. Look around, do you really think another 1% or 2% hike in rates is going to spike this inflationary spiral? If you do, I want to have some of what you're drinking, or smoking. Go take a look at what Volker had to do last time we saw this. Most of you don't remember because you were either too young of not yet born. To most of you the historical record is just a bunch of numbers on a page. Jeese, did you see the latest numbers from the Atlanta Fed.? As far as they're concerned, we are already in recession. And we'd be lucky if at 8.6%or so, we've begun to stabilize before we begin to decline. How long do you think it's going to take to get back to 2%....even 3%. A week, a month, a year. Worst of all, energy is the key to breaking the monster's back. Do you even begin to see anything meaningful being done to address it? I do not. Charles Haselberger on 7/8/2022 12:07:34 PM

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