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Market Stages Technical Breakout
www.oneoption.com
Yesterday the market closed above the May 19th high ahead of major news.
PRE-OPEN MARKET COMMENTS WEDNESDAY – The S&P 500 rallied 120 points off of the low from Monday and the price action has been bullish. Semi conductor stocks lead the charge yesterday and there is a nice bid to tech stocks. It tried to rally overnight, but those gains were erased by a soft ADP report.
This morning we learned that only 37K new jobs were created in the private sector in May and that is much lower than the 111K that was expected. April’s number was revised down to 60K. Yesterday’s JOLTs number (job openings) was better than expected so the two releases offset each other. To be fair, the market only cares about the jobs report Friday. Initial jobless claims have been ticking higher so I will watch tomorrow’s number with interest to see if that trend continues.
ISM Services will be released 30 minutes after the open and that will be an important number. A reading of 52 is expected and any drop to 50 would spark selling because that would be a sign of economic contraction. Global economic numbers have been soft and it is just a matter of time until that impacts domestic activity.
The “Big Beautiful Bill” is finding some resistance. Most notably Elon Musk. No new trade deals have been announced and the deadline is a month away.
From a fundamental viewpoint, there are issues. Bond yields are rising while economic growth is contracting and that is very unusual. It’s a sign that the appetite for debt is low.
From a technical standpoint, the market tested the 100/200 day MAs last week and it flew off of it. That is a sign that buyers are interested and it is bullish. Yesterday the market broke through the high from May 19th and that is bullish.
I doubt that the ADP miss is going to spark major selling because it rarely does. If ISM Services drops, it could spark selling. I would wait for that release.
Support is at SPY $595.50 and resistance is at the overnight high of $597.60.
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