There is simply no way to paint today’s monthly Payroll Employment Report as anything other than terrific. As highlighted in our Economics section, non-farm payrolls rose 266K in November, well above the Bloomberg consensus estimate of 180K, the Unemployment rate fell to just 3.5%, and there was an upward revision in the prior two months of 41K.
This was about as good as it gets from an economic report, with solid growth and no real surge in labor inflation. The market has responded by ramping nearly 1% in the early going, which begs the question of whether the recent correction that began last Friday is over. As we highlighted in our Early Wednesday post, the market wasn’t as overbought following three days of weakness but was not yet oversold despite the weakness. We found there really wasn’t a near-term edge until it is resolved one way or another. Today’s ramp gets the market back toward the record high, but our problem is the same…our key tactical indicators remain in overbought territory, and should be in more neutral territory in order to kickstart the next leg higher toward our front-end loaded 2020 S&P 500 (SPX) target of 3350.
Again, sometimes the best tactical course of action is to take no action – and in my opinion, this is one of those times.
Past performance is not a guarantee of future results. Index returns are unmanaged and do not reflect the deduction of any fees or expenses.
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