Is a Change in Trend at Hand?

Buyers managed a mild recovery Thursday after two down days. The Dow Jones Industrial Average and S&P 500 rose 0.4%, and the Nasdaq was up 0.1%, but the buying was sustained by the fifth lowest volume of the year.

The low volume was no doubt the result of the approaching Easter holiday, but some traders voiced concern that the jobs report may not live up to expectations, and this kept buyers at bay.

When the jobs data was released on Friday morning, those fears were confirmed. Non-farm payrolls added just 126,000 new jobs in March, well below expectations of 247,000 and the weakest in 15 months. The February jobs number was downwardly revised to 264,000 from 295,000 jobs. The unemployment rate was unchanged at 5.5%.

The disappointing jobs report caused S&P futures to fall 1% on Friday before they ended trading at 9:15 a.m.

The jobs report was so far off target that it revived expectations that the Federal Reserve may not raise interest rates until Q4. Treasury prices rose, and the yield on the benchmark 10-year note fell to 1.85%, down from 1.92% on Thursday. The euro rallied 0.9% against the U.S. dollar, closing at $1.10.

Oil prices fell Thursday after Iran and six other countries, including the United States, agreed on the outline of a nuclear deal that would lift sanctions on the rogue country. The deal would increase Iranian crude exports and put additional pressure on oil prices, which have already fallen 50% in nine months. Brent crude settled at $54.95 a barrel, down 3.8%. West Texas Intermediate (WTI) fell 1.9% to $49.14 a barrel.

At Thursday’s close, the Dow Jones Industrial Average rose 65 points to 17,763, the S&P 500 gained 7 points at 2,067, the Nasdaq was also up 7 points at 4,887, and the Russell 2000 rose 4 points to 1,256.

The NYSE traded 716 million shares with total volume of 3 billion, and the Nasdaq crossed 1.6 billion shares. On the Big Board, advancers outpaced decliners by 1.8-to-1, and on the Nasdaq, advancers led by 1.5-to-1.

Dow Jones Industrial Average Chart
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Chart Key

Declining tops on the MACD indicator for the Dow Jones Industrial Average are a sign of decreasing momentum. The index is trading in a narrow range bounded by its March low and December/March highs. Last week, it recovered after breaking its March low, a minor positive.

Dow Jones Transportation Average Chart
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I’ve previously covered the Dow Theory non-confirmation, i.e., the failure of the Dow Jones Transportation Average to confirm a new high in the Dow Jones Industrial Average, which is a huge negative. The declining tops on the MACD indicator are also a negative, as is the close below the 200-day moving average.

Support for the Dow Jones Transportation Average is at 8,600, and a close below that line would represent a serious threat of a change in trend. Last-ditch support is at the January low, where my proprietary Collins-Bollinger Reversal (CBR) indicator flashed a buy signal.


The overall picture is that of a change in trend for global stocks. While mid- and small-cap stocks are still in a powerful bull market, those with global markets are in trouble.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.

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