Market Snapshot for July 8, 2012 (12:32 am ET):
- Closing Prices: DOW 12,719.49 (+93.49, +0.74%), S&P 500 1,353.22 (+14.00, +1.05%), NASDAQ 2,872.66 (+38.64, +1.36%), Nikkei 225 10,136.85 (+65.71, +0.65%), DAX 7,471.44 (+40.25, +0.54%),
- FTSE 6,054.55 (+51.63, +0.86%)
- OIL 98.45, GOLD 1,531.50, SILVER 36.42
- EURO 1.4337, YEN 81.25, BRITISH POUND 1.5947, U.S. DOLLAR INDEX 75.29
Employment Reports Top Expectations
The main focus heading into Thursday's session was the kick-off of the latest round of employment data. The market has been sluggish throughout the first half of this week's shortened trading week and things were looking to remain that way until June's ADP Employment Report came out at 8:15 a.m. ET. According to the report, private sector payrolls were up 157,000 in June, which was substantially higher than the 60,000 increase that had been anticipated. The futures market had been in a holding pattern heading into the data, but took a large leap on the news ahead of the open.
The positive data continued with last week's initial jobless claims slipping from 432,000 to 418,000. Analysts were expecting a number closer to 425,000. The earlier jump on the ADP data, however, had a much larger impact and last week's report on first-time unemployment claims was virtually unnoticed. This won't be the case with Friday's data. Friday's premarket employment reports include June's nonfarm payroll, the latest unemployment rate, the average work week, and average hourly earnings. Nonfarm payrolls are expected to have increased by 100,000 in June.
Dow Jones Industrial Average (Figure 1)
Thursday's Trend Day Pushes Indices Towards Prior Highs
Thursday's jobs data gave the indices yet another push into two-year highs, although the price levels that hit heading into the beginning of May will once again be strong resistance. The market gapped higher on Thursday after the data propelled it out of its premarket trading range. The move was reminiscent of the strong 15-minute breakouts seen last week. Once of the major differences, however, was that this time around there were more clear-cut price swings intraday to lend greater favor for daytraders taking advantage of strategies on the 5-minute time frame. Another difference was that volume continued to remain on the light side like it has throughout the week so far.
S&P 500 (Figure 2)
Next page: Index results
Index Results
The Dow Jones Industrial Average ($DJI) ended the day on Thursday with a gain of 93.47 points, or 0.74%, and closed at 12,719.49. The strongest percentage performers in the Dow were Cisco Systems (CSCO) (+2.19%), Intel (INTC) (+2.11%), JP Morgan Chase (JPM) (+1.87%), and Bank of America (BAC) (+1.68%). Retailers were amongst the strongest shares in the index following a report on June same-store sales that far exceeded analysts' expectations. The Thomson Reuters Same-Store Sales Index rose 6.5% for the month compared to an estimate of 4.9%. Only three of the Dow's thirty index components posted a loss. They included Pfizer (PFE) (-2.65%), IBM (IBM) (-0.69%), and Verizon (VZ) (-0.32%).
The S&P 500 ($SPX) gain of 14.00 points, or 1.05%, and closed at 1,353.22. The strongest percentage performers in the index were Kohls Corp. (KSS) (+7.08%), KLA-Tencor (KLAC) (+7.02%), Target (TGT) (+6.67%), and Urban Outfitters (URBN) (+5.95%). The weakest performers were Precision Castparts Corp. (PCP) (-3.42%), Intuitive Surgical Inc. (ISRG) (-3.31%), Dr. Pepper Snapple Group (DPS) (-2.71%), and Pfizer (PF (-2.65%).
Nasdaq Composite (Figure 3)
The Nasdaq Composite ($COMPX) ended the session higher by 38.64 points, or 1.36%, on Thursday and it closed at 2,872.66. The strongest performers in the Nasdaq-100 ($NDX) were KLA-Tencor (KLAC) (+7.02%), Urban Outfitters (URBN) (+5.95%), Research In Motion (RIMM) (+4.73%), and Sears Holdings Corp. (SHLD) (+4.55%). Only ten of the 100 index components posted a loss. The weakest were Intuitive Surgical Inc. (ISRG) (-3.31%), Illumina (ILMN) (-2.36%), and Biogen IDEC (BIIB) (-1.27%).
FRIDAY'S OUTLOOK
Getting Technical
Overall the momentum of the daily rally has shifted compared to last week, but the pace still remains stronger-than-average. This has the indices gunning for another test of the year's highs with the potential for establishing slightly higher highs. The creation of a "V"-style of reversal off the daily lows will allow that zone to serve as strong resistance, but the pace of the rally will also mean that a bull trap is possible with the absolute highs of the year breaking slightly on the weekly time frame before we experience another correction off highs on a scale of at least a month.
This will also create a third high on the weekly time frame since the momentum from the rally off last August's lows slowed in February. This would be further confirmation of a larger corrective phase in the market, although so far that correction has been more through time than price on the weekly and monthly charts.
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.
