DJIM #32 2010
Monday, August 9, 2010 at 07:17AM At the end of the day, Friday was not any different than every other trading day last week despite the early NFP# sell off. Most importantly, the same market attributes present all week, won over the day.
This includes ‘resiliency’ in the face of a worse than expected NFP number, dip buyers showing up, shorts unwilling to press and/or even hold an intraday loss in check. If every other reason (there were many last week to sell off the market), this 'poor' employment report was the kicker that should have done damage for more than an hour. Instead, the market showed its durability once again, with the end result a bullish day to build something off. This action may have also shown the market was overlooking the labor report and had set it’s eyes on the FOMC statement this week for some color before deciding what to do. On the other hand, this may not matter much unless something really changes as we head into the latter half of August (attendance will dwindle and catalytic events, data is not on the calendar). Interestingly, the market never even tested the 1131 mark last week and due to Friday’s actions it may not even be a retest, but an easy move higher as we hit the summer doldrums.
The transports outperformed last week and as we’ve been saying as long as this sector remains strong, the market is fine. It also helps materials had a good week, which shows China is on course for a stable, if not strong 2H.