Financials, Staples Lead Markets Higher | Weekly Initial Jobless Claims Beat - Chaikin Analytics

Financials, Staples Lead Markets Higher | Weekly Initial Jobless Claims Beat

Markets finished higher Thursday after a bout of seesaw trading with gains coming at the last hour into the close. The Dow Jones set a new record high and the Nasdaq lagged. Financials were the best performing sector. Consumer staples outperformed on earnings in the group. Communication services also finished strong. Healthcare trailed the market on CAH and BDX earnings and some vaccine patent headwinds on pharma. Energy underperformed but remains the biggest gainer this week. Consumer discretionary trailed. Treasuries were a bit firmer across the curve. Dollar was weaker on yen and euro crosses. Gold finished up 1.8% and has breached a level of resistance, further upside is possible. WTI settled down 1.4%.

$Gold Breakout

Gold has moved above the key resistance area of $1800 while also breaking above the recent downtrend line. We’ve been tracking this set up for several weeks and this move seems significant based on the RSI aggressively moving higher above the midpoint level. 

Gold producers were standout gainers in materials while iron ore miners extended their recent advance as well. While companies like Freeport McMoRan symbol FCX, have been breaking out for almost a full year now, they are continuing to advance because of industrial metals especially copper. They also mine for gold and oil. Other names that are more focused on the precious metal have had recent strong performance but are in the early stages. 

Several indicators are still questionable in the gold focused stocks but momentum here might help their RS turn positive. This is way too early to be making any long term bullish calls but the aggressive short-term trader might see some near term opportunities behind the strength.  

Inflation concerns are pushing investors into commodity baskets in a frenzied manner. Grains as well as metals and lumber are advancing at a rapid pace.

20 – year chart

The FANG composite  The NYSE® FANG+™ Index is an equal-dollar weighted Index designed to track the performance of highly-traded growth stocks of technology and tech-enabled companies in the technology, media & communications, and consumer discretionary sectors such as Facebook®, Apple®, Amazon®, Netflix®, and Alphabet’s Google. 

We can see that the chart has been reflecting a downtrend confirmed by the RSI. Support has been broken and the RSI is diving. This is a theme that has been playing out for several weeks and with further downside potentially ahead. The long term trend line was acting as an area of support and the next likely support zone is the 200-day moving average. This is the area to be watchful for any further breakdown. 

S&P futures are showing up 0.1% in Friday morning trading as markets await the April jobs numbers. US equities currently on track for a mixed performance this week with value and cyclicals among the standouts while growth and momentum have come under pressure. Asian markets mixed overnight with China a laggard. European markets higher with Germany a notable outperformer. Treasuries are slightly weaker across the curve. Dollar lagging euro while marginally better vs yen. Gold up 0.3% and WTI crude down 0.4% but on track for a second straight week of good gains.

I feel like I call this out every Friday when I write about Thursday’s action. It continues to be a match between bulls and bears at the 4150 – 4190 area. Bulls stepped in yet again after a quick move lower in the morning. The bulls were able to move the markets above the high of the day and rally the markets into the close.  Some Fedspeak came out again intraday that moved markets into a flutter of trading, but ultimately they found footing and rallied. Also, inflation keeps coming up from all angles but markets seem only to care in the moment. It seems the short-term memory of the market just moves on to other issues but always finds the path of least resistance. 

Two months ago when I first started writing, I warned that the most repeated word you’ll be hearing is inflation. I wish I was wrong about that, but it seems to be a hot topic. There is no doubt that inflation is and should be a concern. I’ll look at some commodity ETFs that really speak for themselves. 

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