A Cinco de Mayo Market Fiesta? | Market Averages Show Indecision

cinco de mayo

A Cinco de Mayo Market Fiesta?

Monday recap: Stocks finished moderately higher Monday, although well off their best levels of the day.

Major Stock Market Averages posted near Identical gains of ~+0.25%. Most notably, the S&P 500 +0.3% at 2114.49 again sits easily within a day’s striking range of a surpassing its prior closing high of 2117.69.

Curiously, the Utilities; DJUA +0.7% at 594 and Financials; XLF +1% at 24.58 and KBE +1.35 at 34.25 were the 2 best performing sectors. We haven’t said that in a while.

DJUA Chart

cinco di mayo market

Their relative strength was despite some further weakness in the bond market at the US 10 year yield hit 2.14%, inching closer to the 2.20% support level.

It’s with little fanfare that the S&P Bank ETF; KBE closed at its highest level is 13 months, and is within 1% of its highest close in 6½ years.

Market Internals showed some stubborn improvement as advancing issues led decliners by less that 1.5 to 1. With HealthCare, Biotech and Social Media waning of late the market is clearly in need of fresh leadership.

Time will tell if banks and financials are ready to fit that role, despite the onerous regulatory environment.

Oil prices have spent the last 3 to 4 days consolidating gains from the loads 6 weeks as Brent Crude is testing near term resistance at $66 to $68, while WTI is trying to close above $60 for the first time since late last year.My trading plan tells me a consolidation above this level sets up a buy. But not yet.

Oil is starting the day with 1½% gains, pressing following market friendly comments from a Saudi Oil Minister. Oil shares have also had a sharp rally off their early March lows. The resilience of oil service and fracking names were given a stern test yesterday as David Einhorn gave an aggressive bearish argument on the fracking industry at the Ira Sohn conference.

OIH: Oil Services ETF Chart

OIH chart

For the most part the responded well after 30 minutes of headline driven selling.

What about the stock market today??

This morning we’ll get the ISM services report at 8:30 AM. Consensus is calling for an in line April report of 56.5 which would match the March report. Last Friday, the ISM purchasing managers report came in at 51.5 an exact repeat from the March number.

Realistically, in addition to a dozen or so high profile earnings reports this week the April NFP and jobs report Friday morning will trump the other economic data we get the next 3 days.
tanderson@mndpartners.com tjanderson56@gmail.com

Twitter: @TJAnderson1

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