Indices Tread Water at Highs as Stock Pickers Are Rewarded
Revisions to employment data on Tuesday may shake things up.
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Markets and most stocks treaded water on Monday as investors await a revision to employment data that will be released on Tuesday. It is expected that payroll data for the year ending in March could be revised lower by as much as 800,000 to 1 million jobs.
This is already well-anticipated and is a big part of the reason that it is nearly certain that the Federal Reserve will cut rates next week. However, it will be a sobering headline and is likely to trigger some talk about the level of economic weakness.
Later this week, we have the CPI and PPI reports, so there is the potential for some inflation news on top of slowing employment, which is likely to evoke the word "stagflation." The economic bears have been warning us for a very long time about the disaster that awaits, and maybe they will have a little something to back them up this time.
Overall, the technical action remains positive, although momentum has been slowing, and there is quite a bit of choppy action. Breadth was slightly negative on Monday as small caps digested some recent gains, but there were over 250 new 12-month highs and a long list of smaller stocks jumping more than 10%. Speculative buying is still alive and well, even though there are some concerns about economic news triggering a negative reaction to the indices.
It is particularly important right now to distinguish between the action of the indices and the action in individual stocks. There is a significant difference in the way many stocks are acting versus the indices.
The indices may be at or near highs, but the number of folks calling for an index correction is extremely high. What they are missing is the good action in many individual stocks.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
