Market Flat Early After Long Weekend

August Nonfarm Payrolls increased far less than (one-third of) expected, but the July increase was also revised up significantly.  This happened while the participation rate increased (indicating more job seekers) and August wages grew twice as much as expected.  Analysts said this all indicates the impacts of Delta on hiring in the much more numerous lower-wage jobs (like travel/hospitality and restaurant/retail) and a commensurate percentage shift toward more jobs being filled in the higher-paying services and consulting sectors. 

Regardless, of the reasoning, this caused a quarter percent gap down at the open on Friday.  However, the bulls were not giving in so easily, and led by the Tech sector the major indices saw a slow rally that lasted all day long.  Only the DIA faded at day end. This left us with a Spinning Top candle in the DIA, and strong white candles in the SPY and especially QQQ.  On the day, QQQ gained 0.31% (to another new all-time high close), SPY lost 0.02%, and DIA lost 0.21%.  The VXX rose slightly to 24.94 and T2122 dropped just outside of the overbought territory to 78.60.  10-year bond yields rose t o1.326% and Oil (WTI) fell 1.27% to $69.10/barrel.

In miscellaneous news, MTCH soared after the close Friday when it was announced that ticker will be added to the S&P500 as of September 20.  MTCH will replace PRGO, which will be moved down the S&P MidCap 400 on that date.  On Sunday, Saudi Arabia cut oil prices for sale to Asia by between $1.30/barrel and $1.70/barrel.  The Saudi state oil company price reduction (on all grades of crude) comes after 3 straight months of increases.  This happens as OPEC+ is increasing production limits and the country is looking to capture market share. This morning, GS lowered its Q4 GDP estimates by a full percent (6.5% to 5.5%) and now expects 5.7% growth for the year. GS cited fading fiscal stimulus, a slowing service sector, and inflation worries as impediments to consumer spending.

On Friday, Senate Finance Committee Democrats prepared a number of new tax proposals.  One of these could impact the market by potentially reducing share buybacks. The proposal was to add an excise tax on all share buyback programs.  These programs have been widely seen as a buoy to the market, putting large buyers under price and preventing major pullbacks.  However, Wall Street shrugged off the news Friday. likely because it was only proposed, by only one party, a year before mid-term elections, and that means the proposal is a very long way from being made into law.

Overnight, Asian markets were mixed again on data that Chinese exports in August beat expectations.  (The average estimate called for a 17.1% year-on-year increase, while they reported a 25.6% year-on-year increase.)  Shanghai (+1.51%), Shenzhen (+1.07%), and Japan (+0.86%) led the gainers.  Meanwhile, Thailand (-0.72%) stood out among the losses.  In Europe, markets are red across the board in morning trading.  The FTSE (-0.31%), DAX (-0.28%), and CAC (-0.08%) a decent gauge to the region, but most of the smaller exchanges are further in the red, perhaps waiting on more direction from the ECB meeting on Thursday.  As of 7:30 am, US Futures are pointing toward a flat open.  The DIA is implying a +0.10% open, the SPY implying a +0.03% open, and the QQQ implying a -0.07% open at this hour. However, 10-year bond yields are up sharply to 1.368% and Oil (WTI) down over 1% in early trading.

There is no major economic news scheduled for release on Tuesday as we ease back in after the long weekend.  There are also no earnings reports scheduled for the day.

After the holiday weekend, traders return with continued concerns about the impacts of the Delta variant and inflation. Sitting at the all-time highs and with no planned news drivers (none today and few the rest of the week except many Fed speakers), it's quite possible that we see consolidation continue today. The trend remains bullish, but we've seen indecision among the large-caps for at least a week as high tech has been leading the rally for some time.

Good trading rules and discipline is what separates long-term success from failure in trading. Concentrate on the process and on managing those things that you can control, while not worrying too much about the things you can't control. As always, manage your existing trades before you go chasing any new ones. However, above all, consistently take profits when you have them. Simply don't let greed turn your winners into losers.

Ed

Swing Trade Ideas for your consideration and watchlist: PDD, EDU, CAN, EBAY, XHB, KR, HPQ, VIAV, AMC, VIPS. You can find Rick's review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

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