Non-Farm Payroll Report Sends Equities Soaring

By Tom Luongo in Gold and Oil News | June 8, 2013 2:07 | Tags: , , , ,

Days like today have me hearing echoes of Bob Cole on Hockey Night in Canada running through my head, “Stick Save!  And a beauty!”   The S&P 500 was well on its way to putting in  a full-blown reversal bar on the weekly chart this week with a close below 1626.40.  Considering just yesterday the markets should have been in full retreat today was setting up to be a potential panic selling day.  But, nope, here to stop the Bears’ breakaway was the Bureau of Labor Statistics with a completely uninteresting non-farm payroll increase of 175,00 jobs.    Add in a billion and a half of Fed POMO-money onto the fire and a mild bounce in the Yen and the HFL algorithms flipped into full-borerisk-on mode.

The rally was back.

And the 6 month rally in equities stubbornly refuses to put up any kind of technically bearish chart signal.  The casualty in this treasuries and gold.  The 30 year bond rose to it’s worse close since January at 3.346%, just shy of May’s high of 3.36%.  This close, however, is bearish for bonds for that spike high in yields was an intra-day whipsaw.  The selling today was more methodical with yields hitting their highest point near the closing bell.

The S&P will have to close above 1676 to resume the rally, otherwise the Fed may be happy enough with it being range-bound for a few weeks while it also tries to contain a potential rout in bonds as we are approaching very important former high yields which this week’s close will bring sellers in from the sidelines if they truly believe the Fed will begin backing off on its QE program.

But for now, “Stick Save! and a beauty!”

 

About Tom Luongo
Tom is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.


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