April 2, 2021

Stock Market Breadth Shows Great Strength Ahead of US NFP Data

Stock Market Breadth Shows Great Strength Ahead of US NFP Data

The President of the United States, Joe Biden, introduced his new stimulus plan of $2 trillion, which is going to uplift the US infrastructure over the coming 8 years. The President plans to fund this spending through higher tax rates, and the concern is that market players may not like higher taxes at this time. However, so far, we have not seen any adverse price as the US stock market skyrocketed yesterday.

Of course, the most important event for traders for this week is the US NFP data, which is due today and the ADP data has set a positive tone for this. One important thing to keep in mind is that today is Good Friday and this means that we are not likely to see much volume in the market. Thus, it is likely that we may see higher volatility if the number is significantly overwhelming or underwhelming.

Asian Markets 

The Asian stock market traded mostly higher on Friday. The Nikkei index advanced 1.55%. The HSI index increased by 1.97%, while the KOSPI index gained 0.70%. The Shanghai index dropped by 0.13%.

Dow Jones and S&P 500: Market Breadth

The Dow Jones’ market breadth gained momentum yesterday. 87% of the Dow Jones stocks traded above their 200-day moving average. 

The S&P 500 stock breadth also showed strength yesterday. 88% of the shares traded above their 200-day moving average. 

Dow Jones Futures Today

The Dow Jones futures are trading higher today. In terms of economic data, investors will be looking at the US NFP number which is due at 13:30 BST. The forecast for this data is 652K, while the previous reading was at 379K.

The Dow Jones futures are still leading the markets and most of the strength in the Dow Jones is chiefly due to sector rotation. The Dow is trading in an upward channel and more recently the price has also formed a double top on the daily time frame. If the price fails to break above the previous high of 33126, we are likely to see a much lower move. The RSI is trading near the overbought zone and this also confirms that the price is overbought. The third sign of caution comes from the fact that the price has gone too far and too fast from its 50-day SMA on the daily time frame. Nonetheless, as long as the price continues to trade above this, we are likely to see higher highs.  

The near term support is at 32,313, while the resistance is at 33,126    

Stock Market Rally

The S&P 500 stock index moved higher yesterday; the index advanced by 1.18%. The tech sector led the index higher and 7 out of 10 sectors closed higher. 

The Dow index also soared yesterday; the Dow stocks moved the index higher by 0.52%. 19 shares advanced, while 10 shares closed lower. 

The NASDAQ composite, a tech-savvy index, closed higher by 1.76% yesterday.

S&P 500 Leaders and Laggards: Diamondback and CarMax

Diamondback Energy stock contributed the biggest gain, soaring 10.51%. CarMax Inc. stock was the largest drag; it fell by 7.048%. The S&P 500 stock index is up 4.74% so far this year.

Dow Jones Leaders and Laggards: Salesforce and UnitedHealth  

Salesforce provided the biggest help for the Dow Jones; it advanced by 3.23%, while UnitedHealth was the largest decliner, it fell by 1.34%.