A solid February employment report capped off a bountiful week for the bulls; the S&P 500 gained 0.45% and the NASDAQ 0.38% after an initial gap up open was sold to push the indexes back to flat in the morning. Bulls remain in complete control after the two week hiatus outside of the multi month ascending channel. For the week the S&P 500 added 2.17% and the NASDAQ 2.35%.
Job creation broke out in February, with the economy creating a net 236,000 new jobs as the unemployment rate fell to 7.7%. Private job creation stood at a robust 246,000. Service industries led the gains with 73,000 new jobs, while construction added 48,000 and health care provided 32,000. Retail also added 24,000.
The S&P 500 and NASDAQ look more aligned then they have for a while chart wise. It appears that after breaking the all time high in the Dow, the next one bulls want to break is the S&P 500 in the 1570s. You can forget about all time highs for the NASDAQ anytime soon due to the bubble Greenspan created in the late 90s.
We continue to see major rotation under the surface as every sector gets its time in the sun as another sector takes a few days off - the last part of this week was a rotation into natural resource plays which had been missing in action for a while. Metals/Mining and Steel are but two examples - these are not great charts but it shows how the laggard sectors led the charge late in the week.
Looking at the precious metals they remain one of the few areas left that cannot get a sustained bid.
The Wall Street Journal posted a chart showing how short selling is going out of style under Ben Bernanke. Current levels in the S&P 500, at 2.5%, are the lowest since August 2011.
Short interest has been trending lower for months as the S&P 500 has kept climbing. In a rising market, short sellers typically scramble for shares, which can push the price even higher and create a “short squeeze.” The fear is the market will keep rising, which will prompt the shorts to be forced to pay even more in the future.