· I look for the Dow to be in a downtrend all week before finding a low sometime between this Thursday and the following Monday.
I came across the words above on Monday of this week. I found them intriguing because I really had no clue as to what the week would bring, given all the uncertainty in the market as of late. I suspected the market would hold its own, given the economic and market fundamentals in place.
Today is Friday, and it appears the market has done just that – held its own. Actually, even with the volatility, the market has done more than hold its own; it is playing with record highs on the S&P 500 and the Dow. If it closes up higher today, or just goes out flat, the market will have demonstrated one important thing – it wants to go up.
· The U.S. auto industry in April rebounded sharply from a bitter and extended winter, with car sales rising 8 percent from the previous year.
· Nonfarm payrolls surged 288,000 last month, the Labor Department said on Friday. That was the largest gain since January 2012.
· Employment gains in April were broad-based, with the private sector adding 273,000 jobs and government payrolls rising 15,000. Manufacturing employment increased 12,000 after rising by 7,000 in March. Construction payrolls gained 32,000. That followed an increase of 17,000 jobs in March.
There is more data out there that suggests I am correct about the market wanting to go up, but the interesting thing is the volatility. The Bears continue to have a strong grip on the market action and the Bulls cannot seem to completely shake the tug downward. The Bulls’ biggest headwind and the reason the market cannot blast through the current ceiling is the bulls themselves. Ambivalence has no place in the market. It can only hurt you.
As I write these words now, both the Dow and the S&P have swung strongly into the red, a ninety-point swing since opening an hour ago. This is volatility and this is the hallmark of the market this year.
· The U.S. Energy Information Administration (EIA) reported a record amount of oil in storage.
Frankly, I don’t get it. Is the Fed the reason the market cannot hold itself up. Could it be the market is projecting to June or July of next year, the hypothetical date the inevitable rise in rates will come? Is the violence in Ukraine a factor? Then again, maybe the market just needs to feel and smell the new air above the current ceiling. Yup … maybe a whiff of the rarified air above 1900 for the S&P and, for the Dow, above 16,600 will release the market from the nagging grip of the Bears.
· EIA said crude stockpiles rose 1.7 million barrels putting commercial crude inventories to 399.4 million barrels. This comes on the heels of previous inventory builds.
How about that oil? That has to be good news for the Bulls, yes? Well, maybe not. The interpretation of some talking heads and celebrity analysts is the inventory buildup signals economic weakness – if less oil is consumed, it means less economic activity. To a degree this is true, but, then again, there are more hybrids, electric cars, and overall more fuel-efficient cars on the road than ever before. In fact, though, the inventory buildup has been going on for some time, despite the high- gas prices. The reality is that the world is using less oil on a permanent basis. The shift to alternative energy is in full swing.
· The EIA also reported that gas supply increased by 1.56 million barrels and distillates by 1.94 million barrels.
Now, if we can only get the big-time speculators out of oil, the dang price of gas would reflect this reality, and if that were to happen, I suspect the Bulls would have a bit more fight in them as the consumers spent those extra dollars not going into the tank.
Trade in the day; invest in your life …
