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Jobs Data Juice Returns

Selected Returns

It was a very big day in the market today, as the better than expected jobs data released this morning showed that 165,000 people were added to the workforce last month, surprising the economists who were forecasting significantly fewer.

This surprise invigorated investors and pushed the S&P 500 Index up 1.90%.

However, many companies in our universe were up much more than that – I’m showing a selection of them in the graphic above – led by EOG Resources up 11% today on better than expected earnings. Many of our European holdings were also up big as investors looked favorably on the continent in the hope that stimulus is nearing that will fix their issues.

As an investment manager, I always like to see a strong day led by economically sensitive companies, but Monday will be key to whether this is the beginning of a sustainable move higher or just a continuation of our existing pattern of Higher Highs and Higher Lows.

higher-highs

You can see that the most recent higher low spent only a nano-second at the 34-day moving average (the solid blue line on the graph above with the little red tail of the candle barely touching it) before closing well above it yesterday. Today, we pushed back up to a new Higher High at the top of the upper band (which represents a 2 standard deviation move above the 20-day moving average).

Monday, if we can push higher again and close above today’s closing price for three consecutive days, our pattern will be broken and a new market pattern will be in place – one that could set us up for a major rally into year-end (the Presidential Election year historically rallies from August to December). If that doesn’t happen, we will be watching to see if the current pattern can continue to work stock prices higher in stair-step fashion.

However, investors will have the weekend to digest the jobs report and Europe will have the weekend to try to avoid doing something stupid, so Monday we will see if investors are still convinced that moving the market higher is the right decision.

Have a great weekend!


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