Stocks fell in a rocky session on Friday, October 2, with the S&P 500 trading lower by about 1% while the NASDAQ 100 fell by over 2.8%. There was a modest rotation out of technology into some sector that might benefit from another stimulus. Whether or not a stimulus comes from Washington is yet to be seen.
The latest jobs data was a bit of a disappointment, with the headline non-farm payroll missing estimates. More concerning to me was the unemployment rate, which fell, but only because the labor pool shrank and more people left the workforce. This trend is not moving in the right direction.
Source: (BLS.gov)
The importance of Friday's move lower should not be underestimated. The S&P 500 was stuck below the 50-day moving average all week until it managed to break above it on Thursday. Then, we traded right below that moving average, a rejection of the previous day's advance. Additionally, we fell out of the rising wedge, bear pennant pattern I had noted on Thursday.
The pattern is bearish and suggests that the index likely has further declines that lie ahead.
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