The NASDAQ enjoyed solid gains while the indexes on the NYSE were held back by financial stocks. Volume ended mix on the day with the NASDAQ showing another day of accumulation while the NYSE fell for the second day in a row. Small cap stocks once again were the headline index once again leading the way for the second straight day in a row. A good day in the markets with volume favoring the technology stocks.
Normally, financial stocks are at least moving higher with the market. Even in February of 2010 we had the banks moving along side the leading stocks. The lack of interest shown by the market in financial stocks is somewhat puzzling. Whatever the reason they are out of favor is just another warning flag. They could very well come into favor tomorrow or next week, but at this point they have been shown no love.
The bright side of things is the continued show of support for technology stocks. In addition, small cap stocks are in favor as well. These two groups are important ingredients to any sustainable market rally. Given the recent strength it is quite conceivable the NASDAQ and Russell 2000 to both see their 50dma and quite possibly try and revisit their previous highs set in April. If volume and price work together the probabilities of this occurring will remain strong.
At the end of the day Goldman Sachs revised their non-farm payroll figures from 500k to 600k. The street had previously been looking for a number from 500k to 525k. As we head into tomorrow’s release of the payroll figures the street will eying the 600k level. Now, the government loves to play with figures by using birth/death rate adjustments, seasonality adjustments, but the biggest of them all is the amount of jobs created by the census workers. Rather than remove the anomaly from the figures the government is adding them in. More importantly than figuring out what the government should or shouldn’t do will be the reaction. Look for how the market reacts in terms of price and volume as it will set the tone for the market in the days ahead.
Keep in mind we haven’t seen a positive action from a Friday in quite some time. It could be we see a different tune this time around however, nothing is written in stone. Normally, during healthy uptrends Friday’s will be show traders are willing to hold stock over the weekend. Conversely, if the market is weak traders will simply dump stock as shown over the past few weeks. A change in this trend will certainly help out this uptrend and even better would be getting a 2nd follow-through day.
Keep an open mind and do not marry a side. Stay disciplined and enjoy your weekends!
