The trading desks are reporting that many
of the same institutional investors who were selling into the post-Fed rally yesterday to lock in end of the month profits
for window dressing are back today with fresh start-of-the-month money. Its being put to work very selectively into the narrow
sectors related to what is now almost 70% of economic growth: the almighty consumer!
The March PCE data this morning confirmed
the GDP number yesterday that the consumer continues to spend while the economy creeps along at a slow but still positive
pace. Along with a solid ISM maunfacturing report comes the first of the stimulus checks and with it a new view (at least
for the day) toward large cap tech, retail and consumer discretionary and even select financials.
The dollar remains the major topic of conversation.
As oil fell to $110, profits were being booked in the energy sector and there are few buyers today for gold or any commodities.
The question being asked is whether this is just another oil-dollar fake-out or the early stages of a true rotation looking
through the valley of the slowing economy and into the expansion of economic recovery?
The one thing every trader agrees with is
that tomorrow morning’s Jobs number is huge! Huge because Jobs are the best indicator of future consumer sentiment and
spending. Estimates are calling for a further loss in non-farm payroll in the range of 90,000 jobs and a rise in unemployment
from 5.1 to 5.2%. Clearly, the Jobs number is capping today’s rally as the Dow flirts with 13,000 and the S&P holds
just above 1400.
Interestingly, both the Dow Utilities ($UTIL)
and the Amex Biotech ($BTK) are continuing to bump up right against resistance while the Transports ($TRAN) continue to move
higher (mainly on the strength of the rails and without the airlines) but without confirmation from the Cyclicals ($CYC) which
continue to be stuck right around their 200 day MA.
The bottom line is while the beginning of
the month money inflows make for an intersting rally in many beaten down or ignored sectors, the real tale of this tape comes
tomorrow morning with the Jobs number. That’s when “Hoofy” the bull has to show his true colors. Until then,
enjoy the green and book some partial profits where you have them. The real show is tomorrow morning at 8:30.
Smooth sailing.
Yacht
