Jobs in the spotlight: Stock market reverses direction after massive sell-off | chart watcher

One day doesn’t create a trend. This is one of the lessons we learned from this week’s stock market moves.

March nonfarm payrolls data showed the U.S. economy added 303,000 jobs, higher than estimates of 200,000. Additionally, the unemployment rate fell from 3.9% to 3.8%. After yesterday’s massive sell-off (largely due to comments from Federal Reserve officials that a rate cut may not happen this year), you’d think today’s strong jobs report would have investors on edge. This would extend the narrative that interest rates will remain there for longer.

But that didn’t happen. Investors welcomed the strong jobs report as stock and Treasury yields rose. Broader indices closed higher and the VIX retreated to 16.13. This number is slightly higher, but not cause for concern. Although the index has been down for the week, it was encouraging to see the broader market closing higher after the selling pressure seen on Thursday.

It’s possible that the stock market was heating up a bit. Nothing rises in a straight line, and investors should expect extended markets to pull back. Yesterday’s drop was large, but only about a 1% drop. Given the good economic indicators, investors have no reason to worry. Manufacturing and jobs data were good this week, so there’s no reason to panic.

Several stocks have hit all-time highs, as can be seen in our extensive list of stocks with all-time highs. StockCharts New All-Time High Scans. Notable names filtered out of the scan include Meta Platforms (META), ConocoPhillips (COP), and Exxon Mobil (XOM). Several companies in the energy sector were filtered out in this scan.

Energy stocks fell. The Energy Select Sector SPDR ETF (XLE) has hit new highs again and its steep rise is still underway. And it’s not just oil prices that are rising. SPDR Gold Shares ETF (GLD) and iShares Gold Trust ETF (IAU) also hit new all-time highs. Commodities continue to perform strongly, as seen in the Invesco DB Commodities Index Tracking Fund (DBC).

Chart 1. Commodity prices, especially oil and gold, continue to rise. Oil prices rose in a short period of time. The prices of gold and other raw materials are also rising.Chart source: StockChartsACP.com. For educational purposes.

But it wasn’t a good day for all stocks. One of the stocks that took a big hit today was Tesla, Inc. (TSLA). It was one of the most active stocks in the S&P 500, closing down 3.59%. The stock is trading below its 200-day simple moving average with the Relative Strength Index (RSI) falling, approaching oversold territory. Looking at the TSLA weekly chart below, the stock is at support, but has room to fall much further before there are signs of a turnaround.

Chart 2. TSLA stock may fall out of support. TSLA’s stock price could fall to the next support level around $102.Chart source: StockCharts.com. For educational purposes.

While it’s encouraging to see a recovery near the end of the day, what’s even better is to see a broad-based rally. You’ll find out when performance week begins. The rotation into industrials, finance and materials will have a positive impact on the stock market. So watch it StockCharts Sector Summary A panel that identifies when rotation begins.

Profit Showdown

Earnings season kicks off for the big banks the weekend of April 8. This means the focus will be on corporate earnings in the coming weeks. The S&P 500’s first-quarter earnings are expected to grow 3.6% year-over-year, according to FactSet. If companies report higher-than-expected earnings and earnings, the market will probably continue to trend higher.

As long as a company generates positive cash flow and exhibits higher profit margins, investors have no reason to sell their investment.

Important inflation data is also expected to be released next week. March CPI and PPI are released on Wednesday and Thursday. So fasten your seat belt! Next week may see choppy trading activity. But unless disastrous news breaks out that no one can control, don’t let a little disruption change your investment strategy.

weekend wrap up

• The S&P 500 closed at 5,204.34, up 1.11%, and the Dow Jones Industrial Average closed at 38,904, up 0.80%. The Nasdaq Composite Index rose 1.24% to 16,248.52.
• $VIX was down 1.96% at 16.03.
• Best performing sector this week: Energy
• Worst performing sector this week: Healthcare
• Top 5 Large Cap Stocks SCTR Stocks: MicroStrategy Inc. (MSTR); Super Microcomputer (SMCI); Coinbase Global Inc. (COIN); Vistra Energy Corporation (VST); Vertiv Holdings (VRT)

On the radar next week

• March Consumer Price Index (CPI)
• March Producer Price Index (PPI)
• More Fed Speeches
• Earnings from Citigroup (C), JP Morgan Chase (JPM), Wells Fargo (WFC), and Delta Airlines (DAC)

disclaimer: This blog is for educational purposes only and should not be construed as financial advice. You should not use any of our ideas and strategies without first evaluating your personal and financial situation or consulting a financial professional.