Jobs and Oil Up, Stocks Down

For awhile it looked like today's action would give back most of yesterday's gains, but in the last half hour of trade stocks rallied back to erase a large portion of their intra-day losses.

The unemployment picture was a positive as anticipated, but oil once again tempered any enthusiasm for stocks. The February nonfarm payrolls was up 192,000, while private payrolls increased by 222,000. Both were better than anticipated and even the prior months data was adjusted upward. The unemployment rate fell to a 22-month low of 8.9%.

But as I said, oil tempered those employment numbers as it once again hit a fresh two-year high at $104.60 per barrel at its peak before settling at $104.42 per barrel at the close.

There did not appear to be any reason for the end of day rally, but I suspect the herd is simply conditioned now to buy the dips. And so they did. Monday's are always green, right?

Here's today's charts:



NAMO and NYMO both fell back near their respective 6 day EMAs.



NAHL and NYHL also fell back and are also near their 6 day EMAs.



TRIN and TRINQ both flipped to a sell, with TRINQ sitting almost right at its trigger point.



BPCOMPQ managed to ebb just a bit higher and remains on a buy.

So the Sentinels appear to have gone back to a neutral condition overall, but the system remains on a buy. I can't read too much into these charts given the volatile action as things can change very quickly in such an uncertain market. We didn't rally on the 1st of March, so I'm guessing that Monday won't be the free money day that so many traders have come to expect.

I'll be posting the tracker charts over the weekend, so I'll see you then.

 

[valleymd]

I found it interesting, in yesterday's commentary you said there could be some short-term weakness from the TRIN and TRINQ charts. Good call.

 

[coolhand]

Thanks.

TRIN and TRINQ measure overbought and oversold levels and is generally used as a contrarian indicator. A rising TRIN is bearish and a falling TRIN is bullish. When you look at those charts you should note that 1 is considered the baseline for each signal. A ratio of 1 means the market is in balance. Above 1 indicates more volume is moving into declining stocks, while a reading below 1 indicates more volume is moving into advancing stocks. In this particular case, TRIN ended the day at 0.57, while TRINQ ended the day at 0.48. Both readings were well below 1, which is bearish. Having said that, remember that this signal is used by many traders as a contrarian indicator. The Guy who developed this indicator, Richard W Arms, Jr., considers the market to be overbought when the 10-day moving average of TRIN declines below .8 and oversold when it moves above 1.2. I am using a 6 day moving average, but there isn't much variance in the results. Since we were well below those overbought and oversold levels, it was a reasonable bet to expect a short term decline, which we got.

I found it interesting, in yesterday's commentary you said there could be some short-term weakness from the TRIN and TRINQ charts. Good call.