FRIDAY:
Oil inventories were more palatable, and now the market turns to jobs. As noted above, the weekly jobless claims do not point to any real strength in job creation. Indeed, expectations in the 178K range don't point to much anticipation of a surge. It might be a disappointment given the steady climb in jobless claims the past two months.
If jobs are in line, a bit lower, or a bit higher, the market probably won't react much to the news and will instead focus on what it means in terms of the Fed and oil prices. Stocks have already rallied on the news about a kinder and gentler Fed, and that leaves high oil prices and NASDAQ at resistance as the two potential drivers. Those are not exactly the best points for a rally.
Again, we don't want to run scared of the shadows in a good rally. 2100 is a big deal for NASDAQ, however, and thus it warrants some caution. Volume has improved as it moves toward that level and leadership remains solid. If it plows right through we will still want to see the immediate response when it tests. You know by now that stocks or indices often break through resistance or support after a long run up or down, seeming to indicate the selling is really on. What happens, however, is that there is a rebound as profits are taken or shorts cover as the case may be. How that rebound pans out is the key to what happens next. Often the break through resistance or support is the last gasp of an extended move. It will need to rebound and set up the next phase.
Thus we are not afraid of the shadow of success a la the Fed, just recognizing real possibilities and getting ready for them if they occur. We will continue to look for leadership stocks making breaks higher, but a lot of them have done so on this move and will need another rest or test to set up the next entry point. The action has been good and it is getting better on NASDAQ. That is good as it faces the next resistance at 2100. We are going to watch how it handles that level, and if it deals it a summary blow we will continue to look at positions to take advantage of the move. If it stalls out in need of a rest, we will lock in some gain as we have been doing and get rid of laggards. Then we see who holds up best and then comes back when the test is over. |
