The jobs number was decent at 280,000 and now the spin maestros are calling for a September rate hike, which would be the first one in 9 years. Never mind that first quarter GDP was under water at -.7%. See how complacency works? There are several camps where some believe a rate hike is coming in September while others believe it will be December. One thing you can count on, Fed governors will come out and attempt to manipulate sentiment between meetings as they’ve done during the past year.
Whatever the case, the market was decent about it. Traders had spent much of the week stressing out about longer-term bond prices dropping, which obviously meant rates were going up. Something has to wake people out of their complacency. Traders continued to remained fixed on ordinary run of the mill problems like easy money policies. But let's make sure we understand the Fed doesn’t control longer term interest rates. Many people keep their eye on the 10-year Treasuries and this week that market broke the 200-day moving average.
What traders need to be more concerned about is the monthly chart. As you can see January was an awesome month, it’s a big green power bar. But the latest action has erased all of those gains. The good news is the situation is not dire yet. Luckily for the housing market and anyone else who wants to borrow January 2014 which is the low you see was a really good short covering month. That is holding the market up right now. But if the termites come in to eat away at the bar over the summer I probably don’t need to look any further as to what might hurt the stock market come the fall. If that bar is erased it could be a very quick move to the 200-month moving average which just so happens to coincide with a major buying green bar all the way to the left from November 2008. So, if you are going to watch anything, forget Janet Yellen and watch this.