Market Not Worried About Wage Inflation – Could Be A Speed Bump Friday
POSTED BY PETE STOLCERS ON MARCH 8
The market has been very resilient. Last Friday it tested the 100-day moving average and it bounced off of that level. We have seen follow-through buying this week. Yesterday stocks opened on a negative note and the losses were erased throughout the day. Support at SPY $270 held and the market finished on the high the day. I’m expecting to see follow-through buying today.
Steel tariffs are likely to be imposed and the market was able to shrug off the news. ADP came in better than expected and 234,000 new jobs were created in the private sector during the month of February. This bodes well for Friday’s jobs report.
The main concern is wage increases. This is the catalyst for inflation and a “hot” number last month sparked the 10% correction. Tax related raises and bonuses were to blame and I believe there might be some lingering effects in this report. From this point forward wage increases should settle down.
ISM services and ISM manufacturing were strong this week. We need good economic data to shoulder Fed rate hikes. The next FOMC meeting is on March 21st and I expect them to tighten.
Swing traders should start looking for stocks. If Friday’s jobs report sparks buying we will join the party. I want to see the reaction before I jump back in and I will provide instructions Friday morning.
Day traders should favor the long side. The price action this week has been bullish. Let the bid establish itself and buy strong stocks once the market starts to grind higher. Resistance is at SPY $275 and support is at $270.
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