Stocks finished flat this afternoon as the market took a break from its massive rally of the last two weeks. With the July jobs report due out tomorrow morning, investors had little to go on during today’s trading session.
Weekly jobless claims rose slightly vs. the week prior but did little to hurt sentiment.
“I would certainly consider today one of those wait-and-see days while we wait for the most important piece of data that comes out this week,” said B. Riley Financial chief strategist Art Hogan.
Treasury yields fell again today, too, lifting pressure off stocks in the process. Yields were up significantly earlier in the week in response to China/US tensions and House Speaker Nancy Pelosi’s Taiwan visit.
“It was one of the biggest intraday 10-year yield reversals we’ve seen in a decade,” said Greg Faranello, AmeriVet’s head of rates.
On the jobs report, Faranello added that “these numbers need to keep coming in strong or the recession narrative will grow in the US.”
Fed Chairman Jerome Powell doesn’t think the US is in a recession due to the strength of the labor market. Faranello’s right in that a strong report would help calm recession fears. Powell himself pointed to labor as the main reason he believes the economy is healthier than Q2’s GDP contraction suggests.
If jobs “miss” tomorrow, stocks could react poorly. On the other hand, it could be argued that we’re still in “bad news is good news” territory with another rate hike on its way in September.
“Investors will be waiting to see if the labor market can withstand the Fed’s rate-hike campaign as well as it did in June,” said E*Trade managing director Mike Loewengart.
Much like the general market, UnitedHealth Group (NYSE: UNH) is trading near key resistance at a recent landmark high. In UNH’s case, that’s the late April high and the stock’s all-time high.
UNH had done very well this year compared to the general market. The stock is up 6.3% since January vs. the S&P, which is down 12.80% even after its recent rally.
That makes UNH look way overbought by comparison. The stock also set a lower high relative to its all-time high last week. UNH closed below its bullish trend (yellow trendline) and the 10-day moving average, too.
Plus, the stochastic indicator suggests that UNH has plenty of room to fall.
For those reasons, it might make sense to take the stock short with a trade trigger of $527.43, below today’s low, as the general market looks toward tomorrow’s jobs report.
