Today was quit a volatile session before the May jobs report is disclosed tomorrow morning at 8:30. Stocks traded in both directions today significantly. At the end of the day the Nasdaq Composite (QQQQ) led the market today with a mild 0.2% gain while the DJIA (NYSEARCA:DIA) and S&P 500 (NYSEARCA:SPY) fell in small order 0.3% and 0.1%, respectively. Market breadth was mixed as well with it slightly positive on the Nasdaq and slightly negative on the NYSE. Investor participation was below average which is not unexpected the day before a key piece of economic data is released. Industrials (NYSEARCA:XLI) was the strongest market sector advancing 0.5% while the defensive consumer staples (NYSEARCA:XLY) sector lagged declining 1.2%. While defensive some of the hit today to the consumer staples sector was because some of its components reported disappointing same store sales. Over the last five trading session all market sectors are in negative territory with financials (NYSEARCA:XLF) being the weakest losing 2.3%. The strongest sector has been health care (NYSEARCA:XLV) still a loss at 0.5%. Based on the current stock market direction today’s activity wasn’t material enough to change the support and resistance levels on the DJIA, S&P 500, and Nasdaq Composite in either direction except for the support level on the Nasdaq Composite which is three points higher (see right sidebar). At the low today the S&P 500 came within one point of testing the 1,305 level we have recently been discussing. If the S&P 500 breaches 1,305 then there is not a whole lot of support for it until the 1,257-1,276 levels. Below 2,723 on the Nasdaq Composite there is not much support until the 2,617-2,687 range. The S&P 500 has been range bound not making a whole lot of progress in either direction since mid-February. Tomorrow’s job report could be the catalyst the market needs to move out of its trading range.
Our outlook is: 1) short term: bearish; 2) long term: bullish
No positions in securities mentioned.