Was ADP A Precursor To Friday’s Employment Report?

Courtesy of Yahoo.

Stair-Step Advance Continues

As we discussed previously, the stair-step advance in the markets continues with each breakout leading to slightly higher-highs and then a stall at the 2-standard deviation mark from the 50-dma. Volume continues to contract on up days and expand on down days as volatility becomes more compressed. A correction to the 50-dma is 3.5% and near 11% to the 200-dma.

ADP Employment, Was ADP A Precursor To Friday’s Employment Report?

Breadth Remains Weak As Market Advances

” As shown in the chart below, although the S&P 500 traded at an all-time high as recently as last week, the cumulative advance/decline (A/D) line for the broader NYSE universe peaked on June 11 this year. The divergence between the two looks similar to early-September last year—the point at which it was mostly the “big 5” stocks within the S&P 500 (the “generals”) that had powered the S&P 500 to its September 2, 2020 high.” – Charles Schwab

ADP Employment, Was ADP A Precursor To Friday’s Employment Report?

“The percentage of S&P 500 stocks trading above their 50-day moving averages peaked in April, troughed in June, improved until recently, but has come under pressure again. The same can’t be said for the NASDAQ and Russell 2000, which both peaked in early February, since which time they’ve generally been descending.”

ADP Employment, Was ADP A Precursor To Friday’s Employment Report?

“Relative to their 200-day moving averages (DMA), all three indexes have been generally trending lower since April, as shown in the second chart below.” – Charles Schwab

ADP Employment, Was ADP A Precursor To Friday’s Employment Report?

ISM Bucks The Trend

Unlike weakening manufacturing surveys from other countries and various regional surveys within the U.S., the ISM manufacturing survey is slightly higher versus last month (59.9 vs 59.5). In a sign shortages are abating, inventories rose to their highest level since 2018. The only concern in the report is employment fell back to contractionary levels at 49. The broad ISM index, while off the peak from earlier this year, is still near the highs of the last 20+ years. The lesser followed PMI Manufacturing survey is slightly higher than ISM, but lower versus last month (61.1 vs 63.4).

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