Market Alert - The Close

Thursday I noted that how the indices respond to the Thursday trade and end of month drop would be the tell. I also said NASDAQ, and SOX if it could as well, needed to break higher, citing MSFT, INTC, AAPL as key stocks.

Well, Friday they obliged. Futures were higher from the open of trade, holding a fairly tight range into the actual jobs report. The President tweeted a couple of hours ahead of the release that he was looking forward to the numbers, and that was interpreted as an indication they would be good. Some attributed the morning rise in futures to that tweet. Looking at the timeline, however, that is hard to conclude given futures were already up before the tweet and didn't move much at all from there. Oh well. The President should not, however, be tweeting about upcoming reports just as his predecessor should not have given out the numbers ahead of the official release. What happens next time if there is no tweet? Assume they are not so great?

The jobs report was good enough and indeed initially caused futures to drop as the 'Fear of the Fed' reemerged. A surprise beat, decent wage growth, and high-quality jobs as the Household Survey showed 904,000 full-time jobs added. Now that is REAL jobs growth, not the Affordable Care Act stunted part-time waiter and burger flipper jobs through 2016.

In any event, if there was some Fed fear, stocks got over it rather quickly, opening higher, rallying to 1:00ET, then working laterally, holding the gains into the close.

SP500 29.35, 1.08%
NASDAQ 112.21, 1.51%
DJ30 219.37, 0.90%
SP400 0.61%
RUTX 0.88%
SOX 2.34%

VOLUME: NASDAQ -13% (2.2B vs 2.4B) but still solidly above average after a month-end housekeeping session Thursday.

Yes, NASDAQ was a big leader with its big names working well. MSFT, INTC, NFLX, BABA broke to higher highs. GOOG, NVDA, AAPL put in solid moves. It is not unusual for techs to take some leadership in the summer and that is why I put the emphasis on NASDAQ making a move. Good start.

Those leaders and many more gave NASDAQ a clean break from its May range, clearing the January penultimate high. NASDAQ is now 34 points from the March all-time closing high. Volume was not as big as the month-end trade, but it was still solidly above average, the capper to a four-session run of much improved volume.

SOX added the bonus move as it too broke higher and cleared the January high. SP500 rallied back to near the top of its range in a decent move. RUTX shook off the Thursday downside and moved right back up to the Wednesday all-time high.

Thus, at least for Friday and the start of the new month the indices that needed to contribute did just that. Okay, next week DJ30, SP500 and SP400 need to contribute . . . hey, it worked Friday.

We banked some gain on BABA, IQ and WHD as the former two hit our initial targets. WHD struggled so we took the rest of the gain off the table. We bought some HTHT, TXN, and VEEV. There were others we could have picked up, e.g. AAPL, RHT, TTWO, but the volume was iffy, they did not move too far, and we likely still get good entries to start next week. On top of that, a quick review of stocks shows some nice patterns ready to move higher to support the upside move. As noted all week, that is what the market needs, i.e. enough leaders to push the indices.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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