JFarrish Dec 2

Markets struggle to start December MARKET OUTLOOK: December 2nd Only 23 shopping days left... just in case you are not paying attention. The pressure on the day was technology (XLK) down 2.1% as semiconductors (SOXX) lost 4.9% on selling in the chip stocks. Some attributed the move to profit taking as tech stocks overall make it two days of selling to hamper the broader market. The sector accounts for nearly 21% of the S&P 500 index. The NASDAQ was off as well being that the index is very heavy weighted to the technology sector by market capitalization. All eyes will be on how this unfolds moving forward. The angst caused by the move in tech pushed the VIX index above 13.7 on the day to close at 14.1. An upside follow-through would be a negative short term for the broad market. The November jobs report is due out this morning with the estimate of 180,000 new jobs added... it will set the tone for the trading day. The hope is to add to the positive ISM manufacturing report on Thursday which was 53.2% versus 52.5% expected. Some positive economic data would be a boost for the final month of the trading year. The S&P 500 index ended the day at 2191 and a test of the key 2185 level we managed to clear on November 21st to move to new highs. Now comes the test of the conviction for investors and the sustainability of the move off the November low. Financials were the leader on Thursday gaining 1.7% as interest rates continue to climb. KBE was up 2% to lead the sector overall. Five of the ten sectors closed in the green with the downside led by technology (XLK), REITs (RWR) and utilities (XLU). Some worries are creeping into the sentiment as seen in the VIX index and today will give some more answers with the jobs report before the open. Treasury bonds yields on the ten-year bond jumped to 2.44% as investors look for the Fed to act on interest rates at the next FOMC meeting. The move in rates is positive for banks, but negative for the interest sensitive sectors like utilities. There is some topping in the charts and I am watching to see how this all unfolds moving forward... economic data will play a key role how the market ends the week. The scans for Tuesday activity was dominated by crude oil-related sectors again, selling in technology, and the financials... UGAZ, SOXX, IEO, XLK, USO, OIH, KRE and KBE. Natural gas (UNG) remains on a vertical move higher, Crude oil (USO) gained 3.6% again confirming the OPEC excitement, emerging markets (EEM) moved lower disrupting the upside move off the November low... watching how the downside plays out. TBT showing the impact of rising rates on bond prices. Biotech (IBB) continued lower and a test of $264 is on top near term as speculation on the downside emerges again. Homebuilders (ITB) hit resistance at $28.05 and turned down for the second day... interest rates rising viewed as negative for home sales. Still opportunities on both sides of the trade as the markets continue to rotate based on the news and data. The trend is positive, momentum is positive and the money flow is positive. The worry over OPEC is over with the agreement signed... crude oil prices are rising. Interest rates are rising and financials are benefitting while bonds are declining. Attention now turns to the economic data with jobs report out today and hopefully adding to the positive news from the ISM manufacturing data. Currently, the buyers are in control as we move forward, but watching the turn lower again in the technology stocks impacting the markets on Thursday. Taking it one day at a time with our stops in place and our focus on the data to confirm the recent moves to the upside.