Today we are following up our previous blog that discussed the potential of a correction in the stock indices’ rally and/or the possibility that what is in process is the end of the proverbial “Bear Market Rally.” We thought this a good idea in light of this morning’s Monthly U.S. Unemployment Report.
The report itself was a bearish surprise as the number of unemployed was greater than what was expected. The number came out at a minus 263,000 versus the expected minus 175,000. The unemployment rate rose to 9.8 pct from 9.7 pct.
Today’s action started out lower and accelerated to the downside after the release of the report. But as often the case, with the news out of the way the stock indices caught some footing and were able to actually trade slightly higher just after midday. Heading into the close now the S&P 500 shows 5.00 lower, Dow down 25 points and the NASDAQ down 3.5.
But we really don’t mean to give a market recap here. What it has described, though, is not atypical of a big report with a big surprise type of day. What we do wish to illustrate is that the 50 day moving average in the S&P 500 pointed out yesterday was touched but so far has held. And as can be seen on the chart, the .618 of the near term Fibonacci retracements was breached a bit and with the market closing almost right on it. We have noticed that the indices often breach this magical ratio on the shorter waves but this time the response has been muted.
Secondly, the major uptrend line starting from the March ’09 low came in today around 1010.00 and will be near 1012.00 on Monday.
Looking ahead, the economic news will be less of a factor as the schedule is rather light for next week. It appears that the 50 day moving average and the uptrend line are in ear shot but remain key barometers of support until penetrated, and most importantly, on a closing basis. At least for this phase of the game.
We look forward to hearing from you.
Jeff Majer
Diego Pilar
CB&S Division
MF Global Inc.
312 261-7380
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