Daily Market Update for 7/8

11 июл. 2022 г.

Summary: Employment data on Friday showed a better-than-expect labor market with Payrolls far exceeding the forecast. The strong labor market opens the door for the Fed to continue its aggressive rate hikes to control inflation.

Notes

Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.

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Friday, July 8, 2022

Facts: +0.12%, Volume lower, Closing Range: 74%, Body: 63% Green
Good: Higher high, higher low, good closing range
Bad: Lower volume on gain
Highs/Lows: Higher high, Higher low
Candle: Medium green body with long upper wick, tiny lower wick
Advance/Decline: 0.96, slightly more declining stocks than advancing stocks
Indexes: SPX (-0.08%), DJI (-0.15%), RUT (-0.01%), VIX (-5.52%)
Sector List: Health (XLV +0.30%) and Technology (XLK +0.05%) at the top. Communications (XLC -0.47%) and Materials (XLB -0.98%) at the bottom.

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Market Overview

Employment data on Friday showed a better-than-expect labor market with Payrolls far exceeding the forecast. The strong labor market opens the door for the Fed to continue its aggressive rate hikes to control inflation.

The Nasdaq rose by +0.12% while the other major indexes fell. The candle has a 63% green body underneath a long upper wick resulting in a 74% closing range. Volume was lower than the previous day. There were slightly more declining stocks than advancing stocks.

The Dow Jones Industrial Average (DJI) declined by -0.15%. The S&P 500 (SPX) fell by -0.08%. The Russell 2000 (RUT) closed the day flat, declining just -0.01%.

Only three of the eleven S&P sectors gained. Health (XLV +0.30%) and Technology (XLK +0.05%) were the best two sectors for the day. Communications (XLC -0.47%) and Materials (XLB -0.98%) had the biggest losses.

Nonfarm Payrolls for June grew by 372,000 compared to the consensus forecast of 268,000. The Unemployment Rate remained at 3.6%.

The US Dollar Index (DXY) fell by -0.13%. US 30y, 10y, and 2y Treasury Yields rose. High Yield (HYG) Corporate Bond prices gained while Investment Grade (LQD) Corporate Bond prices followed Treasuries lower. Brent Oil rose to $105 a barrel.

The VIX Volatility Index (VIX) fell by -5.52%. The put/call ratio (PCCE) rose to 0.768. The CNN Fear & Greed Index inched further from Extreme Fear, but is still in the Fear range, far from Neutral.

Three of the big six mega-caps gained. Tesla (TSLA) had the best gain, advancing by +2.54%. The stock had further gains after hours as news hit that Elon Musk pulled out of the Twitter purchase. Meta (FB) had the biggest decline of the six, falling by -0.76%. Five of the six closed above their 21d EMA and 50d MA.

Tesla also topped the broader mega-cap list. Alibaba (BABA) was at the bottom of that list with a -1.22% decline.

Enphase Energy (ENPH) was the best stock in the Daily Update Growth List, gaining by +4.65% Friday. Twitter (TWTR) was at the bottom of the list, declining by -5.10%. Twitter moved lower after hours for the same reason Tesla moved higher.

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Looking ahead

There are no significant economic news or earnings reports scheduled for Monday.

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Trends, Support, and Resistance

The Nasdaq briefly rose above the 50d moving average but closed below the line.

If the five-day trend line continues into Monday, that would mean a +2.29% gain.

A continuation of the one-day trend line points to a +0.54% gain.

Returning to the trend line from the 6/16 low would result in a -1.15% decline to start the week.

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Wrap-up

Analysts are needing to reconsider again what actions the Fed might take considering a much stronger labor market than they initially expected. Despite news of big tech hiring freezes, payrolls grew in June as other sectors continue to hire.

Stay healthy and trade safe!