S&P 500 Futures At Record Levels!
???? Today’s Spotlight Market
Equity market bulls rejoiced after better than expected employment data gave traders the confidence to send the S&P 500 index to record levels on Friday. However, not all the economic data released on Friday was bullish.
The Institute for Supply Managers Non-Manufacturing Index for April came in at 53.1, vs. expectations for a reading of 54.0. Though readings over 50 are considered expansionary, the pace of expansion slowed last month. Other ISM sub-indices also showed signs of slower expansion, including the employment index (52.0 in April vs. 53.3 in March) and the business activity index (55.0 in April vs. 56.5 in March).
???? Fundamentals
Finally some good news on the employment front, as the Labor Department announced that April non-farm payrolls rose by a better than expected 165,000 jobs. However the real positive news was in the monthly revisions. Here March’s figures were revised higher by 50,000, and February’s jobs totals were raised by 64,000.
The unemployment rate fell to 7.5% in April. This was the lowest unemployment reading since December of 2008. All of April’s gains were in the private sector, which posted a rise of 176,000 jobs last month. Government payrolls continue to decline, shedding 8,000 jobs, with losses seen at the postal service and at the state and local levels.
The reaction in the markets to the favorable jobs report was robust, with equity futures soaring to new highs, and the S&P 500 trading above 1600.00. Treasury futures were among the biggest decliners on Friday, as some traders moved out of safe haven assets like bonds and into equities. The U.S. Dollar was also weak against most major currencies, with the exception of the Japanese Yen, which was down over 1% vs. the “greenback”.
???? Technical Notes
Looking at the daily continuation chart for the E-mini S&P 500 futures, we notice prices “spiking” higher after the better than expected data on U.S. employment.
Although the rally appears to be gaining momentum, we must note that trading volume has been light the past several sessions, and the 14-day RSI is displaying a bearish divergence, as this momentum indicator has failed to make a new high reading despite a move to all-time highs on Friday. 1650.00 is seen as the next resistance level, with support found at the April 18th low of 1530.75
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