Stocks finished the day higher in another volatile trading session. Most gains came following the JOLTS report, which was weaker than expected at 7.6 million versus estimates of 8.0 million. Meanwhile, last month's numbers were revised to just over 8.1 million. The JOLTS numbers are so difficult to predict and have such significant revisions that, in my opinion, the only numbers that matter are the revisions.
Still, the S&P 500 liked it, stocks rallied, and the gap from yesterday's decline was filled. That gap fill now becomes resistance at 6,040 and, with a rise above resistance, paves a path to 6,085.
However, if the index cannot clear that resistance level, we will likely see the 5,840 gap, which has been open since mid-January.
Getting beyond the very short-term, though, I still think that where the stock market goes from here is based on where bond yield goes, and for now, the 10-year is still hovering around the 4.5% level. But that is going to be changing over the next couple of days, I would think, given the ADP, ISM, Productivity, and Jobs numbers coming this week and the CPI report early next week.
The problem for the 10-year is that if it falls below 4.5%, it could head back to 4.4% and then down to 4.15%. The quarterly refunding announcement tomorrow at 8:30 a.m. will also have a say, especially if the Treasury signals that it plans to issue more debt on the back of the curve.
The data is also likely to shape inflation expectations. The RINF ETF shows that inflation expectations are at a point of no return. A break out above $33.50 on this ETF would most likely be a sign that the market fears inflation is not only sticky but may very well be due to accelerate in the future.
Finally, bitcoin survived its weekend try of $91,000 again, but it appears to be putting in a lower high. This continues to be at risk of a break of $91,000, especially with an RSI trending lower while trading below its 10-day exponential moving average, which the latter has served as resistance the past two days.
-Mike
Key Terms & Definitions by ChatGPT:
1.JOLTS Report – The Job Openings and Labor Turnover Survey (JOLTS) is a monthly report by the U.S. Bureau of Labor Statistics that measures job openings, hires, and separations, providing insights into labor market strength.
2.Gap Fill – In technical analysis, a gap fill occurs when the price of a stock or index moves back to cover a previous gap in price action on a chart, which can then act as a support or resistance level.
3.Resistance Level – A price point at which an asset historically struggles to rise above due to increased selling pressure.
4.10-Year Yield – The yield on the 10-year U.S. Treasury note, which is a key benchmark for interest rates and investor sentiment on economic conditions.
5.Quarterly Refunding Announcement – A report from the U.S. Treasury that outlines upcoming plans for issuing government debt, influencing bond markets and interest rates.
6.Back of the Curve – Refers to long-term bonds in the yield curve (e.g., 10-year or 30-year Treasuries), as opposed to short-term securities.
7.RINF ETF – The ProShares Inflation Expectations ETF, which tracks the breakeven inflation rate by comparing Treasury Inflation-Protected Securities (TIPS) and nominal Treasuries. A rising RINF suggests growing inflation expectations.
8.Relative Strength Index (RSI) – A momentum indicator in technical analysis that measures the speed and change of price movements, helping identify overbought or oversold conditions.
9.Exponential Moving Average (EMA) – A type of moving average that places greater weight on recent data points, making it more responsive to price changes than a simple moving average.
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