Jerry Samet
07-09-2016, 12:15 PM
The employment report came out before the open yesterday and it was much stronger than expected. The markets gapped open and spent the rest of the session going higher. All the major averages put in solid gains with the COMPQ gaining 1.64% and the SPX rallying 1.53%. Both closed at their intraday trading highs, a sign of strength. Volume was higher across the board. It was about average on the Nasd and a bit below average on the New York. Leading stocks were strong also with the leaders index rallying 1.89% on volume that was slightly higher than Thursday and about average. The index put in a new high on both a price and a relative strength basis. The fact that quality growth stocks are leading the market higher is a positive sign and could point to higher prices ahead. The market has been strong and all losses after the Brexit sell off are gone. We are a something of a cross roads here. The SPX came within a couple of points of it’s all time high of last summer. The COMPQ still has to clear it’s recent highs of this spring and has more to go to reach it’s all time highs of last summer. If the SPX goes into new high ground it will put into question the thesis that we are in a bear market that started last summer. If the COMPQ were to also go into new high ground it would further cloud the picture. I still believe that we are in a bear market, but it is very hard for the markets to have a major decline when world central banks are keeping interest rates at zero or even negative levels. The fact that the same central banks are printing trillions of dollars each year in funny money isn’t helping either. This cycle should have ended two or three years ago but has been kept going by the actions of the central banks. No one knows how long this can continue, but it will end and when it does it will likely be ugly. Jerry