[Chart courtesy of MarketWatch.com]

1. Moving the markets

We saw another wild day in the markets with the major indexes tanking, as the Nasdaq was still negatively influenced by rising valuations and ever climbing inflation fears.

It was a strange day, because the tech sector rebounded in the afternoon, in part due to Amazon Buyback rumors, which traders took as a hint that the sell-off may have been overdone. As a result, the Nasdaq bounced back to its unchanged line, but the other 2 major indexes remained in the red with the Dow leading the downside charge.

On the economic side, we learned that job openings soared to a record high of 8.1 million with the labor market being totally out of sync. Nobody wants to work and, thanks to the current administration’s monetary give-away, it’s more “profitable” for many to sit at home and collect stimulus checks and other assistance in amounts larger than their salaries would be.  

And that does not only apply to low-end jobs. Commented ZH:

It looks like the hiring (and retention) shortage isn’t just for rank-and-file minimum wage jobs.

UBS has now said that, amidst historic competition and a “retention crisis” in the investment banking world (which we noted weeks ago), it is going to pay a one-time $40,000 bonus to its global banking analysts when they are promoted. This is double what some of the bank’s competitors are offering.

Despite the chaos in the markets, the US Dollar went sideways again, as it did for the past 2 sessions. 10-year bond yields flip flopped and, after diving sharply early on, surged back into the close and over the 1.6% level. Gold followed the same theme by recovering towards the unchanged line after an early drop.

The only solid green number we saw all day was the Commodity index which, after yesterday’s dump, reversed and surged higher.

No matter what asset class you owned, there was no place to hide, because the bears were in no mood of taking prisoners.

[Chart courtesy of MarketWatch.com]

1. Moving the markets

An early rally, at least for the Dow, petered out with all 3 major indexes diving into the close. The S&P 500 managed to hug its unchanged line for most of the day but succumbed to weakness in the end with the Nasdaq being the guilty party dragging down the indexes.

Technology continued its slump, making Friday’s gains look like a dead cat bounce, as traders rotated out of the high-flying tech sector and moved into companies better suited for a strong economic rebound.

“The tech price action is especially frustrating for many as the thought was Friday would elicit a more sustainable rebound in the space,” Adam Crisafulli, founder of Vital Knowledge, said in a note. “Instead, the group is seeing aggressive selling and accumulating technical damage as prices breach key levels.”

SmallCaps got thrashed with the widely held VBK losing 2.7%, and the sector closing below its 50-day M/A, as Bloomberg shows. Surprisingly, commodities reversed the northerly trend and gave back some of their recent gains, as did Lumber futures, whose reckless bullish ascent has contributed to sharply increased pricing for new homes.

Despite the US Dollar being flat, and the 10-year bond yield rising back above 1.60%, Gold managed to eke out a 0.35% gain and produced one of the few green numbers in today’s roller coaster ride.

It was a sloppy start to a new week, despite early promises, and may have been simply a hangover from Friday’s disgusting jobs report.  

[Chart courtesy of MarketWatch.com]

1. Moving the markets

Early weakness gave way to a mid-day pump, which was followed by a date session rip with all three major indexes closing in the green. The laggard again was the Nasdaq, as “value” continued outperform “growth.” YTD, the Russell 1000 Value index has gained 17%, while the Russell 1000 Growth Index shows only a meager 5%.

It seemed like traders were front running tomorrow’s jobs report, which is highly anticipated due to its representation of the labor market recovery. If today’s much improved weekly Initial Jobless Claims, which dropped to a pandemic low of 498k vs. expectations of 527k, is any indication, we might be in for a surprise. Despite today’s encouraging improvement, keep in mind that over 16 million Americans remain “on the dole.”

“Today’s read is another proof point that we’re one step closer to full economic recovery, sooner than some may have expected,” said Mike Loewengart, managing director of investment strategy at E-Trade Financial. “As we see some serious momentum building on the jobs front, all eyes will be on how this plays into action taken by the Fed, if any.”

Bond yields were in retreat mode with the 10-year holding steady below the 1.6% mark, while the US Dollar did its best imitation of a swan dive, as Bloomberg demonstrates in this chart. This combination did wonders for Gold, which surged 1.7% and finally recaptured its $1,800 level.

We will now have to wait and see if tomorrow’s jobs report can indeed live up to these high expectations, or if we will be witnessing the old standby routine, namely “buy the rumor, sell the fact.”