Top Line: Well, that isn't what we expected. The Dow rallied above the 13K level and now it has an opportunity to prove itself. The bulls are indeed smiling this evening because the news on the Fed is out and known plus earnings are coming in ok according to the market. As usual, we were early on our call for a top. We continue to hold some cash just for this type of outcome.
If this level can hold, then the Dow has a little leeway to run but we don't expect there is much left to this upside. The FSI certainly had a good day today with all four stocks up on the day.
The big news coming on Friday morning is the jobs' report which still is expected to show about 75K loss in jobs for April. This number should be a non-event at that level but could be market moving with any noticeable distance from that number. That is not to say that we know what direction that might be but there could be a move if expectations are not met. Wow, there's some good analysis for you. With the stock rally today, we don't feel qualified to be making calls on the direction of stocks for tomorrow morning.
But, we are pretty confident that no matter what the day to day action is currently, there is a lot of work to do on the downside and we might as well get on with it. This recent up move has been labored at best even with a day like we had today (Thursday) where the Dow pops almost 1.5%. When you put it that way, it really doesn't seem very much at all plus it was on meager volume. Yes, and NASDAQ was up almost 3% so that is more significant.
We have been expecting a drop in the commodities and a rally in the dollar. With that thinking, we have considered the impact the oil stocks have had on the indexes in the past, well, a long time. We have thought that the fall in the gold would be felt over in the oil patch and that would take down some of the oil stocks, which it has. On a day like today, XOM (Exxon-Mobil)announced earnings and dropped over 3% while the Dow was up. But, that is one reason that the Dow didn't move up as much as the NASDAQ, too many oil/commodity related stocks in the Dow. Chevron and Alcoa are in the Dow and they did not contribute to the up move in the Dow.
In the news, there were a few semi-important items but none that really mattered all that much to trading. We continue to wait for the jobs' report and we'll finally see what they want to do. We leave you with no homework this weekend so enjoy and we'll be back on Sunday evening.
FSI: 95.21 (up strongly so we know speculation is alive and well)