What losses the market was unable to erase during Friday's session it reclaimed today thanks to an afternoon rally. The market traded very quietly in a tight range through lunch time, but was able to break above pivot highs at around 2pm ET before accelerating into the close. Friday's jobs report, as dismal as it was, could ensure that QE remains at a steady pace through 2013. The Fed has essentially created an environment where good news is good news, and bad news is perhaps better news for the stock market. As technical traders, though, we simply have to obey the price action, which continues to point to higher prices.
The S&P is in a tricky spot right now as it trades in the middle of the upper level range. Right now, I don't think you have much of an edge trading the indices and I think it's best to only play the best looking chart patterns. Consumer Staples (XLP) and Consumer Discretionary (XLY) stocks continue to act well while high-beta tech stocks show relative weakness. The financials continue to be out-of-play and could simply be waiting for earnings, which start to roll in on Friday with JP Morgan (JPM) and Wells Fargo (WFC). The Homebuilders (XHB) caught a nice two-day oversold bounce but it's hard to have much conviction now on the sector after recent technical damage. One of the best-performing sectors right now is retail.
Continue to stay flexible until we get more clarity. The macro price action remains bullish, but you cannot ignore the faulty signs in the market. Alcoa (AA) kicked off earnings season tonight with a solid report, but the numbers were not enough to push it higher after-hours after the stock rallied 1.82% during today's session.
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*DISCLOSURES: Marc Sperling is long HUM, NFLX, UNH, GS, CAT, AMGN, RAX, BLK, NKE, TBT, CF, S, TOL, ANTH, FB, SHOS. Long calls in the following stocks: AAPL, BBRY, UA, TBT, GNRC, CF, DDD, TOL, S, F.
Short TLT.
