A review of the Charts
Very much a quiet week on the economic calendar in the US as there are no major releases until Thursday when the jobless claims are due. So we go from NFP to forecasting the next NFP right away with few distractions in between. That should bode well for (upside) momentum for now.
Our take on the NFP: Basically as expected at -190k, the unemployment rate certainly lags and an upward movement in that rate reflects a greater desire to participate in the workforce. Jobs were created last month in a few sectors but there were no surprises as Health Care and Education led. There was a very nice pick-up in temporary jobs (45k) which is the ultimate leading indicator for job creation, so on net the report did show signs of life on the job-front. Anything but improvement from here on out would be a disappointment.
Below we dive into a few important sectors in the US to see how they are looking on the weekly charts. We start out with the S&P 500 and finish w/ health care. No doubt that there is upside room left in most sectors, but that upside in many cases is closer to 10% and not the 25%+ that we've become accosted to this H2.
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The first chart is on the S&P 500 and the target remains 1150. The 20 & 50 weekly EMAs are acting as support but resistance lies ahead and we are still forming lower-highs overall. Last week was only an inside candle so we'll need to close above 1100 to continue that upside momentum and remain bullish.
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Energy - The 200 weekly EMA did act as support the last few weeks which is a good sign as previously it was resistance. That is bullish. Where do we go from here though? $67? That would be a lower-high, create divergence and become a sell signal.
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The all important and rather disappointing XLF. $16 was an initial take-profit line and has been tough to recapture. The 20 & 50 weekly EMAs are acting as support and there appears to be room to $20, but at what point is the lack of upward momentum a sell signal?
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Industrials, XLI. Boxed in for now but with similar support in the 20 & 50 weekly EMAs. Will resistance be broken at $28 and change? The million dollar question.
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Technology, XLK. Has been a good run this year and the double-bottom punctuated by the outside candle in March should have been a signal as Tech has become the leading indicator in the US. No doubt that the chart is still bullish and no reason to sell just yet. Can we achieve $25?
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Consumer staples. How ironic is this that you should have bot the XLP at 7% unemployment and sold at 10% - 11% unemployment! Goes to show how much fear and need for liquidity was in the market last winter.
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Consumer discretionary. The rebound appears fantastic on the chart, but the axes are in Log scale, not linear so the rebound from March has been from $16 to $28, which is great, but that pales in comparison to other sectors. We are still making lower-highs on the weekly chart so although the consumer is still the driver of the US economy money has not been flowing back into this sector as quickly as others on that unemployment rate.
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Health Care - It's where the jobs are so forget those Tonka toys for the kids, buy doctor stuff like stethoscopes. This chart is probably the most bullish of the bunch. the 20 & 50 weekly EMAs are acting as support and the 200 & 360 weekly EMAs are being tested. Breaking above eyes $33, so another 10% from here which really is not that good if this is as good as it gets.
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