Monday, April 09, 2012
Stock Market Commentary:
Stocks and other risk assets fell on Monday in the wake of Friday’s disappointing jobs report and after inflation topped estimates in China. Technically, this long overdue correction is upon us and the key going forward is to measure the health of this pullback. Ideally, one would like to see the bulls show up and defend logically areas of support (i.e. prior chart lows or important moving averages). The fact that the Dow Jones Industrial Average broke its 50 DMA line on Monday suggests this rally is under pressure. If the other major averages follow suit, then the market will officially enter a correction. The next level of support is its 50 DMA line near 1370.
Jobs Report and High Inflation In China Hurt Stocks:
The stock market was closed on Good Friday so Monday was the first day stocks could react to March’s disappointing jobs report. The Labor Department said, U.S. employers added 120,000 new jobs in March which missed the +203,000 expectation. The unemployment rate slid to +8.2% which was somewhat encouraging. On Sunday, China said its consumer price index (CPI) rose 3.6% which topped the 3.3% estimate and suggests inflation is increasing.
Market Outlook- Rally Under Pressure
Risk assets (mainly stocks and a slew of commodities) are pulling back again which is considered normal after such a strong move. The key going forward is to gauge the “health” of the pullback to see if it is just another mild pullback within a broader uptrend, or the beginning of something more serious. As always, keep your losses small and never argue with the tape. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!