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Hot Jobs...Rising Rates?...Greece Headache...Global Markets Sell Off.....

Market Overview:

A very boring and yet interesting week just took place. Price action here in the United States was extremely boring. No one will deny that. Small caps were higher but big caps were lower by about one percent each. Large caps not leading while froth led which is normal for this market since nothing that takes place makes much sense. That's the new normal. The interesting part of the week came from today's jobs report which was very hot. 280,000 jobs created which was twenty percent above expectations. This is exactly the type of jobs report that has everyone, including the market itself, begging for that first rate hike from the fed to deal with inflation. There's enough inflation from bloated stocks prices alone and now everyone wants the fed to get busy. Just start the process. It's fine to go slow as we know she doesn't trust global health yet but at least start. Today's jobs report has everyone expecting the first rate hike sooner than later. Certainly it should take place this year. Hopefully by September. I think the fed will likely wait until then because she'll want to see a few more solid reports before trusting it completely. Not just jobs reports but manufacturing reports as well. If the reports come in well the next month or two we will see the first hike in quite some time. It should only be one as she will not get aggressive by any means but at least it'll be a start. The market knows it's coming so there won't be any shock to the system and that's just the way she wants it and likes it. So yes, the week was boring with regards to price for the most part but today's report on jobs got the markets juicers rocking with anticipation of that first rate hike and it appears the market won't mind it at all.

Europe was hit hard last night with a lot of those losses tied to the news out of Greece. They're about to default was the news. They said they were going to miss their payment due today but said no worries, we're going to bundle all the weekly payments in to one payment to be made on the last day of June. It's their way of buying time so they can further beg everyone in the euro zone to please bail them out. By not making the payment they're letting everyone know how bad things are but their bluff may not pay off. The last second save could still occur but they are really pushing it here and the euro zone is smelling something bad here. It doesn't look good for Greece. It appears they're in huge trouble and if no one bails them out and they do default, the markets will be very unhappy. The market will start to sniff out what will take place as the month moves along but it's not silly to think that Greece may be a problem for the market starting from here. They will be under intense watch from here. Europe was under pressure and the broad Dow Jones Global index fell by 1.11% this week.


Sector Watch:

Utilities and real estate stocks and reit's struggle when rates are about to rise. We saw that big time this week when the economic news started to improve, especially today when the jobs report came out way hotter than expected. The market is still in the world of rotation. One sector dies but another sector does well such as we saw today in the financials which do well in a rising rate environment and that sector closed up 2.75% for the week as seen in the banking index below. The Transports snapped back late week holding our key 18 Month rising support line on the IYT ETF. The Semi's fell by better than 2% for the week giving back a healthy chunk of last weeks move. Gold and most commodity sub groups continue to struggle on balance.


The Week Ahead:

The bears have been unable to accomplish what they need to do in terms of taking the market below key support on the Sp at 2040-50. The bulls on the other hand have every chance to break out above the double top at Sp 2134 but simply can't get the job done meaning we remain in a meandering market to nowhere within the range of 2040 to 2134. We are at the same price on the Sp now as we were in late December to give you an idea of how annoying and difficult this market has been. All I can say is you need to adapt to the environment we're in meaning do not over play. Not too much exposure at any given moment in time. Next week is quiet on the economic front but the Federal reserve meeting looms on June 17th in the not too distant future.

S&P500 Weekly Chart

Dow Weekly Chart

NASDAQ Weekly Chart

Dow Jones World Index Weekly Chart

Banking Index 3-Year Weekly Chart

TLT Weekly Chart

 


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