It’s another strong day for the US stock market, with the S&P 500 currently 50 points higher on the day. More importantly, they are now within a stone’s throw of their 200-day moving average. Given that stocks have spent very little time beneath this critical ceiling of resistance, they could easily be pushed back above. That would likely trigger an even stronger rally in the stock market, which I feel is a probable occurrence. Much will depend upon the results of Friday’s Bureau of Labor Statistics (BLS) report that will be released on Friday. If the results show an exceptionally strong labor market, that could provide the needed trigger for stocks to rally.
This morning’s ADP report showed that 227,000 new jobs were created in the month of October. This is much higher than the 178,000 the market was anticipating and could set the stage for a strong BLS report on Friday. It seems that recent months have shown the BLS report to be lower than ADP. We could see a “make-up” month where the BLS report comes in even higher than ADP. We must be on guard in case this happens.
Given the continued weakness in the bond market, we will maintain our locking bias.