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2 years ago

Non Farm Payrolls, the day of reckoning

Traditionally the markets sell off in May, or do they?
The real sell off has come from the financial sector, and this year has been exacerbated by comments from the RBA and APRA.
Comments by Janet Yellen about the US markets being “somewhat” overvalued might be the thin edge of the wedge for a pull back.

Here are some charts that demand attention.

Firstly the  XFJ financials Index, this is clearly the drag on the broader Index the XJO.
This chart highlights the seasonality of the pullback the highlighted area’s are the May June period of the
past 5 years.
This is clearly in a broad UP trend.

XFJ seasonal

 

 

 

 

 

 

 

 

 

Historically Bull markets and Bear markets are determined by the averages the DOW and the DOW transports.
When they both confirm a direction the broader market is the declared.

The Weekly chart of the transports have consolidated on the bottom support level of 8600.
With considerable resistance at 9200 has occurred with 7 attempts to push through.
A breakdown from this level would set the Index as a Downtrend, if this further confirmed by the DOW 30 a Bear Market will be declared.
This support area needs to hold and the Index trade back to the resistance area.

transports

 

 

 

 

 

 

 

 

 

 

 

 

 

The DOW 30 is also experiencing significant resistance at 18,100, this chart has not displayed the lower high required for trend analysis. This ascending pattern can also be very bullish with a breakout and continuation to the top.
But the significant resistance and falling RSI is telling of a potential pullback waiting in the shadows.

DOW WEEKLY

 

 

 

 

 

 

 

 

 

 

 

 

Thirdly the most important canary in the coalmine is the  Non Farm payroll jobs report.
Historically when the Unemployment levels reach 5.5% the market can enter into significant down trends.

Jobless claims.