Positive End to a Volatile Stock Market Week

By: PhilStockWorld

Courtesy of Doug Short: The S&P 500 closed an exceptionally volatile week with a gain of 0.78%, thanks to the Friday gain of 1.28%. Today’s employment report for May was a perfect signal to the bulls: Nonfarm employment met or slightly beat expectations, so that key economic indicator is still in the green, but the unemployment rate ticked up ever so slightly from 7.51% to 7.56%. And since we round to a single decimal, it registered as a full tenth higher at 7.6%. Why the uptick? Labor force participation grew faster (up 420K) than the new jobs (175K). That uptick suggests that the Fed won’t be tapering QE in the near term, and it was that fear of tapering that created the high volatility this week.

In contrast to the US markets, key Asia-Pacific indexes closed the day in the red before the US emplyment report. The Nikkei slipped a fractional 0.21%, the Hang Seng closed down 1.21% and the Shanghai Composite fell 1.33%. In contrast, the eurozone outperformed the US, with the EURO STOXX 50 gaining 1.79%. Interestingly enough, the STOXX 50 was flat until the US jobs report. So US indexes weren’t the only one looking for direction from the BLS.

Here is a 15-minute look at the week.

Today’s volume was right at its 50-day moving average. Investors will be watching next week to see if this past Wednesday’s close, 3.61% off the all-time closing high, was the extent of the current “correction” before we set another all-time closing high.

The S&P 500 is now up 15.23% for 2013 and 1.55% below the all-time closing high of May 21.

For a better sense of how these declines figure into a larger historical context, here’s a long-term view of secular bull and bear markets in the S&P Composite since 1871.

- Phil

www.philstockworld.com

Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)

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