Good day! Thursday was a quiet one for the market. As I spoke about extensively in yesterday's column, the U.S. indices were quite extended on the 60-minute charts heading into the day. The Dow Jones Ind. Average ($DJI) and S&P 500 ($SPX) both had three waves of buying under their belts with volume weakening as they trekked higher. Additionally, there was strong overhead resistance to contend with. This helped slow the action even further on Thursday, but we also have Friday's highly anticipated employment data to thank for this slowdown.
Dow Jones Industrial Average (Figure 1)
March's jobs data is due out ahead of Friday's opening bell. It will include the nonfarm payrolls, hourly earnings, average workweek, and the most recent unemployment rate. Nonfarm payrolls are expected to rise between 160,000-225,000 for March. The national unemployment rate fell unexpectedly to 8.9% in February, but it is unlikely that we will see further improvement this time around. February's "real unemployment rate" came in at 15.9%, off 2% from its peak a year earlier.
Friday's data does not end with the jobs report. At 10:00 a.m. ET we will also see the release of March's ISM index and February's construction spending. Auto and truck sales are due out at 3:00 p.m. ET.
Thursday morning's data was mixed. The number of people filing for first-time jobless claims fell 6,000 last week to a seasonally-adjusted 288,000, but the previous week's decline was upwardly revised from 382,000 to 394,000. The four-week average rose by 3,250 to 394,250. Meanwhile, U.S. factory orders were down in February by 0.1% after jumping 3.3% in January. The Institute for Supply Management's purchasing managers index fell from 71.2 in February to 70.6. A decline had been anticipated, but the reported number was still stronger. The data did not have much of an impact on the day's price action.
S&P 500 (Figure 2)
The Dow Jones Industrial Average ($DJI) had a loss of 30.88 points, or 0.25%, and closed at 12,319.73 on Thursday. Eight of the Dow's thirty index components posted a gain. The only one to top 1% gain was 3M (MMM) (+1.11%). Four of the Dow's components fell more than 1%. They were American Express (AXP) (-1.55%), Intel (INTC) (-1.37%), Home Depot (HD) (-1.36%), and Cisco (CSCO) (-1.04%).
The S&P 500 ($SPX) fell 2.43 points, or 0.18%, and closed at 1,325.83. The strongest performers in the index were JDS Uniphase (JDSU) (+4.93%), XL Group (XL) (+4.02%), Frontier Communications (FTR) (+3.79%), Joy Global (JOYG) (+3.69%), and First Solar (FSLR) (+3.51%). The worst performer was Northrop Grumman Corp. (NOC) (-8.57%), which was hit hard after Citigroup cut its price target for the defense contractor. Carmax Inc. (KMX) (-7.20%), United States Steel Corp. (X) (-4.21%), and CBS Corp. (CBS) (-4.13%) rounded off the top losers.
The Nasdaq Composite ($COMPX) ended the session higher by 4.28 points, or 0.15%, on Thursday and it closed at 2,781.07. The top gainers in the Nasdaq-100 were Joy Global (JOYG) (+3.69%), First Solar (FLSR) (+3.51%), Symantec Corp. (SYMC) (+2.71%), and Biogen Idec (BIIB) (+2.18%). The weakest performers were Marvell Technology Group (MRVL) (-2.63%), Broadcom Corp. (BRCM) (-2.45%), Urban Outfitters (URBN) (-2.36%), and Seagate Technology (STX) (-2.11%).
Nasdaq Composite (Figure 3)
Friday's action is likely to be directed by the morning data, but gold, oil, and silver still look to hold up into the weekend and are not showing strong signs for an imminent correction. The overall market bias from yesterday's column remains unchanged.
Unless otherwise stated, the index action described in this article relates to the E-mini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.
Toni Hansen is president and co-founder of the Bastiat Group Inc., DBA Trading From Main Street. Toni is one of the most respected technical analysts and traders in the industry. She has been trading and educating new traders, money managers, professional market analysts and traders throughout the boom and bust of the last decade. She has worked in conjunction with some of the world's top financial exchanges. Learn more about Toni Hansen and the educational services she provides through her website at http://www.tonihansen.com.