SUMMARY:
- Stocks hang in after soft open, find some spark w/oil inventories, melt higher into close.
- Retail sales solid with some surging, most decent.
- Factory orders remain solid.
- Jobless claims rising, the other silent killer.
- Oil inventories climb, oil slips lower but does not implode.
- Volume picking up for techs as NASDAQ probes key resistance.
- Jobs report likely not to result in much market change unless it is very strong.
Bullish bias remains as stocks drift higher on low trade.
The solid Wednesday rally on the Dallas Fed president's comments gave way to some softer action to start Thursday, not uncommon given a strong move. Stocks started lower and traded lower most of the morning, but there was no serious selling. Indeed, semiconductors, retail and healthcare were all moving upside. Some sterling same store sales boosted retail in general though there were the usual laggards and disappointments. In any event, those sectors kept things alive during the morning weakness until stocks found some footing and managed to turn the negative into a positive.
There were many potential catalysts for the turn positive such as the retail sales, decent factory orders, oil inventories improving above expectations, but when it came down to it, the move was basically a continuation of the bullish bias in the market. With a good move under its belt, NASDAQ near resistance, and the jobs report out Friday, stocks were in no mood for another rip higher. Even so, however, they turned from negative to positive as they melted higher all afternoon to close positive. NASDAQ volume was lower but not bad; NYSE volume remains a problem.
That is a clear indication that the bullish bias exhibited in this run remains intact as start slow, finish fast action is a hallmark of a bullish move. Volume remains light overall, however, though NASDAQ is showing much better trade as it approaches key resistance at 2100. We have to be somewhat on guard for a sudden change in direction in the form of higher volume selling when you approach key resistance after a long run, but thus far nothing really indicates this will happen as the action in leaders, price/volume, and general price moves remains at the forefront. With oil still in the fifties, however, and given the strong price move (sans a lot of volume), we just need to avoid complacency. Unlike the Fed we are not going to assume that this combination of characteristics will lead to a reversal and sell off. We will remain alert and act according to what stocks tell us. For now the action is good but with 2100 just ahead and light volume we are not going to assume things will necessarily remain the same. |
