Week Ahead: Recession Risks Ease, Markets Hit New Highs But Internals Weak

All four major indices jumped on strong economic signals Historically low unemployment and lagging inflation: Goldilocks Economy or Low Participation Rate inflating headlines? continues to outperform, positively correlated with USD

Recession worries eased on Friday after surprisingly strong gains and even lower boosted U.S. stocks on the final day of last week’s trade. The , , and all jumped after the unexpectedly robust release, which turned what had been a losing week into a second straight week of gains.

While both a low unemployment rate and signal an economy that can sustain growth without needing monetary tightening, concerns that a high employment rate could be due to a low are rising, and that lagging wage growth diminishes the sustainability of the strong labor market. Upcoming wage reports may provide a more solid clue regarding the trajectory for wage growth, and with it employment. As well, this upcoming week’s equity market performance might more accurately indicate whether these record highs are sustainable.

Green Sectors, Paltry Gains

The S&P 500 jumped 0.96% on Friday, with every sector in the green. outperformed (+1.21%) while (+0.55%) lagged.

The benchmark’s advance was the highest in a month, though the week’s gains were a paltry 0.2%. The index was pressured by (-2.97%) which tracked lower, posting a second weekly loss. On a weekly basis, outperformed (+1.34%) even though bets had increased that languishing inflation could force the Fed to cut rates.

SPX Weekly

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After posting a new all-time high Wednesday, the SPX erased three-and-a-half days of gains, extending losses into Thursday for its lowest close in eight sessions. The trading pattern for the week developed an imperfect hanging man (with an upper shadow, diminishing the bull-trap characteristics of the pattern), complete with a following candle that closed below

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