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Stocks rally after jobs report

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Stock futures were moving higher into Friday's early jobs report and we did see a brief pop after the report, but the reaction was fairly muted by the time the stock market opened on Friday. By early afternoon most of the gains were gone but the dip buyers showed up late producing a positive reversal day. The Dow ended the day up a modest 45-points.

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The February non-farm payrolls jobs report came out with about 40,000 more jobs being created in February than expected. The unemployment rate dipped to 4.7%. Overall it was a pretty good report in that it was better than expected, but not too hot to concern the Fed.

And speaking of the Fed, this week they will almost certainly be raising interest rates again at the FOMC meeting. That's expected, but anything else or any clues to what happens next that isn't already priced it, would be a market mover.

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The SPY (S&P 500 / C-fund) pulled back to the 20-day EMA on Thursday and produced a positive reversal day. On Friday it was a similar formation following through on Thursday's reversal, so technically this look pretty good for the short-term, but obviously the market weakened a but last week so we'll be watching the dip buyers to see if they are still interested.

The weekly chart of the S&P 500 shows the breakout from the trading channel and we though that may have been an extreme, and now we see it pulling back toward the old resistance line. The question is whether that will now act as support.

The DWCPF (S-fund) also pulled back to some key levels at the 50-day EMA, the bottom of a trading channel, and the December peak so the support looks strong and could be make or break levels for the small caps.

The Dow Transportation Index had fallen below the 50-day EMA on Thursday but rallied back above it on Friday. There's some support at 9100 that could be tested but we see that a lower low was created during the recent pullback so there are some cracks in the technical picture.

The EFA (I-fund) rallied strongly on the weakness in the dollar Friday. The rally pushed it to its highest closing price since 2015.

The dollar was down sharply on the jobs report Friday, breaking down from some support, but testing another level of support at the 50-day EMA.

The AGG (bonds / F-fund) bounced back a little on Friday after a serious decline over the last two weeks. There are 2 major open gaps above, but the bond market may be in trouble and rallies to resistance probably need to be sold.

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Thanks for reading. We'll see you back here tomorrow.

Tom Crowley

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S&P 500 (C Fund)
DWCPF (S Fund)
Dow Jones U.S. Completion Total Stock Market Index (^DWCPF)
EFA (I Fund)
iShares MSCI EAFE Index (EFA)
AGG (F Fund)
iShares Lehman Aggregate Bond (AGG)