Friday’s surprise jobs report number sent stocks flying high! It was not expected and traders rushed into the market. Given the overbought nature, today’s pullback in light volume is a welcome sign. We need consolidation like today as it allows for the market to keep its feet underneath it. Crude oil once again moved higher as it bounces off support. It would not surprise us to see the commodity push up to $45-46 before the summer ends. A solid session today for the market and something we were happy to see.
Not a surprise we didn’t get any new longs tonight, but today’s pullback does clue us into the health of this market. Consolidation days like today tell us institutions are holding steady with their positions. Another day or two of tight low volume action would be a welcome sign. So much for a tough summer as “sell in May” is being tossed aside this year. As long as this type of action continues this trend will continue to defy the skeptics. Remember, our opinions are useless. Just price action. Look at those who continue to follow the advice peddled by ZeroHedge. Scary. Get a sound plan and follow the trend. Let the pundits handle the noise.
The Federal Reserve will get one more jobs report before their next meeting. June and July figures were pretty good. Outstanding would have been 500k or more. Another strong number of 200,000 or more will make things very interesting for the Federal Reserve bank. How will the explain holding rates so low with robust job growth. If the economy is doing well enough why are rates still near record lows? All we know is the Federal Reserve is trying to keep the wealth effect alive. We are only going to follow them and as long as they remain in this market we’ll stay as well.
We hope you had a great weekend. Best of luck this week.
