It was a very quiet day ahead of tomorrow's employment reports. The S&P 500 gained 0.12% and the NASDAQ 0.27%. More interesting was the bond market where ten year Treasury rates came to touch 3% for the first time in a few years. This was on the back of some good economic data in the U.S.
The Institute for Supply Management (ISM) said its services index rose to 58.6, its highest since December 2005, from 56 in July. The reading handily topped economists' consensus expectations for 55 and beat the high end of forecasts. A reading above 50 indicates expansion in the sector. The new orders and business activity components hit their highest level since February 2011. New orders rose to 60.5 from 57.7 and business activity hit 62.2 after scoring 60.4 in July. That said, a separate report on factory orders dropped 2.4 percent in July.
Overseas, the European Central Bank kept rates on hold, with ECB President Mario Draghi repeating that the central bank is committed to keeping interest rates low for an extended period.
We have now seen the markets rally 5 of the past 6 days although it's been begrudgingly. With tomorrow's employment data and a Fed meeting in the near future the intermediate term future should become more clear soon. With the S&P 500 the bulls will want to see a clearing of the 50 day moving average as a start. So the index is either at the top of this channel and ready to roll over or ready to begin the newest leg of this rally.
The NASDAQ is in good shape and with a big move tomorrow of the employment data could actually be at new highs in short order.
Here is a chart of those 10 year Treasuries:
Today was a strong day for both energy stocks in general and oil services stocks, expressed by the ETF OIH, specifically. We are still seeing a lot of what are called "dojis" in technical analysis - these are when a stock or ETF finishes in the middle of their daily range, rather than at the top or bottom.
Two areas we want to see support and move up by the S&P 500 are transportation stocks and semiconductors - you can see transports are similarly positioned to the S&P 500 while semiconductors (no surprise) look a bit more like the NASDAQ as it is a tech heavy index.
LinkedIn (LNKD) which just yesterday did a massive share offering rebounded impressively today.
NPS Pharma (NPSP) which we highlighted a few weeks ago with relative strength during the downtrend, broke to a new 52 week high today.