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Market Makes New All-time High
www.oneoption.com
The market was able to breakout of the trading range ahead of major news.
PRE-OPEN MARKET COMMENTS THURSDAY – Yesterday the market staged a nice rally and it was able to breakout to a new all-time high. ADP showed a slight decline and that got the “bad news is good news” crowd excited before the open. ISM Services came in strong at 53.8 (51.0 expected) and that reversed a weak reading last month (49.4). This got buyers excited because ISM Services had dipped into contraction territory for the first time since December 2022. Yesterday we had a little something for everyone.
The market is watching for signs of economic weakness. That should prompt the Fed to ease. This scenario does not excite me. If growth starts to slow, investors will worry that the Fed waited too long and that a recession could be looming. I would prefer to see strong economic growth, steady interest rates and declining inflation. That would be the best backdrop for a market rally. ISM Services is an important number because services accounts for 80% of our economic activity. As a survey it is current and not backwards looking.
The jobs report tomorrow should be good. I am expecting 175K new jobs and wage growth of .3%. This would be a good number and it would be supportive of the market breakout.
After a big rally yesterday, we can expect a day of rest for the market. This is especially true with a big economic report pending.
Next Wednesday we will get the CPI before the open and then the FOMC Statement in the afternoon. We want the breakout to hold and we want to add to it in the next few days.
Favor the long side, but don’t be aggressive. We don’t have the price action or the volume to support large positions here.
Support is at $533.00. There is resistance at the high from yesterday. That is a H+ trendline.
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