Down on Good News

By Jani Ziedins | End of Day Analysis

Jan 09
S&P500 daily at end of day

S&P500 daily at end of day

End of Day Update:

Stocks tumbled, unimpressed with a stronger than expected employment report. Many pundits and talking-heads blamed the weakness on lagging wage growth, but that is a fairly obscure detail to to trump the headline numbers and derail a two-day rebound.

It is worrisome when markets ignore a bullish headline and instead fixate on a minor detail buried in the report. There was more than enough good news to launch us higher if that is the direction the market was poised to go. Since we sold off instead, that tells us the market is not in the mood to go higher and we need to be prepared for further weakness. When good news cannot move us higher, what will happen when we get some legitimate bad news?

Technically, the market slipped back under 2,050 and is resting on the 50dma. Volume was the lowest in five days, showing not a lot of traders joined in todays selling. That can be interpreted two ways. Either owners are not interested in selling and we will bounce soon. Or, few people sold and there is still a mountain of supply waiting to hit the market. Since complacency is the rule these days, I fear the next trigger that turns confident owners into fearful sellers.



About the Author

Jani Ziedins (pronounced Ya-nee) is a full-time investor and financial analyst that has successfully traded stocks and options for nearly three decades. He has an undergraduate engineering degree from the Colorado School of Mines and two graduate business degrees from the University of Colorado Denver. His prior professional experience includes engineering at Fortune 500 companies, small business consulting, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two children.