Stocks Wait For Friday’s Jobs Report

Thursday, January 6, 2011
Stock Market Commentary:

The major averages were quiet on Thursday as weekly jobless claims edged higher, retail sales failed to impress, and the US dollar continued its week-long advance. Heretofore, market internals remain healthy evidenced by broad leadership, favorable volume patterns, a rising advance/decline line, and a healthy number of new highs on both major exchanges.

Weekly Jobless Claims & Retail Sales Fail To Impress:

Before Thursday’s open, the Labor Department said weekly jobless claims rose by +18,000 to 409,000, matching estimates last week. However, the smoother 4-week average average slid to 410,750 which was the lowest level since July 2008 and bodes well for December’s non-farm payrolls report. Many national retailers reported weaker-than-expected sales figures for December which put minor pressure on retailers.  Elsewhere, the USD continued its week long advance which put pressure on a host of dollar denominated assets (mainly stocks and commodities). However, it is important to note, the major averages are actually higher this week alongside the rising dollar which is a strong positive divergence. This can be attributed to a stronger-than-expected economic recovery in the US.

Market Action- Market In Confirmed Rally Week 19

It was encouraging to see the bulls show up in November and defend the major averages’ respective 50 DMA lines. The market remains in a confirmed rally until those levels are breached. The tech-heavy Nasdaq composite and small-cap Russell 2000 indexes continue to lead evidenced by their shallow correction and strong recovery. However, it is important to note that stocks are a bit extended here and a pullback of some sort (back to the 50 DMA lines) would do wonders to restore the health of this bull market. Put simply, stocks are strong. Trade accordingly. If you are looking for specific high ranked ideas, please contact us for more information.

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