It may seem investors are getting cocky, but after two strong months in a row with widening participation, it makes sense investors are feeling better.

Statement Session

That Friday session was remarkable, but it was legit. As I mentioned in the market commentary, the jobs report was nowhere near as ‘strong’ as the chorus exclaimed. David Rosenberg is a perennial grouch, but his work is great, and he points out the folly of the jobs report.

The establishment survey sees the nation shedding jobs, but jobs growth is well below the pre-pandemic trend, even with a flawed headline report.

The market continues to be led by Materials (XLB) and Industrials (XLI) with safe havens diverging, sending Consumer Staples (XLP) higher and Utilities (XLU) lower.

The S&P 500 pierced the 200-day moving average during the week and held on Friday – very encouraging.

How Wise is the Canary

Bonds are said to be the canary in the coal mine among financial assets. So, when we see bond yields start to come down as much as they have, what are we to think?

Maybe the bond market is also an owl.

If this move lower continues, look for the stock market rally to pick up steam and even get the growth names back in the mix.                   

Portfolio Approach

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

Today’s Session

Equity futures have been under pressure all morning even as there is more evidence Friday’s jobs report was not as strong as reported in part because it was not strong.

• Household survey is a disaster.
• Respondents to establishment survey lowest in two decades
• Birth-death adjustments skew numbers to the extreme

Commentators have moved on so the algorithms have no idea what’s really going on. Meanwhile, waiting on more data but also I think technical analysis takes center stage with move through 4,100.

 

 

 

 

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