There is no doubt that the U.S. economy is expanding at a rapid rate. On Friday, there was another positive surprise in job creation and fall in unemployment rate in the Non-Farm Payrolls. Historically, there has been a positive correlation between strong employment data and a surge in the S&P 500. This tradition no longer holds in an economy anticipating rate hikes from the Federal Reserve. Given the recent strength in economic indicators a rate hike is almost certain to take place in June. This is likely to negatively impact share price of companies listing their stock on an index like the S&P 500. Hence, this represents solid investment opportunities in the U.S stock market, more specifically, S&P 500 futures.
Investors Notes:
- Markets were caught off-guard with a jobs report indicating 295,000 new jobs, much more than the anticipated 235,000 jobs.
- The result of the report was an almost 30 point drop in the S&P 500, on the fear that large, international companies will suffer from subsequent dollar strength.
- With the S&P 500 being in a bull market for the last 6 years, a reversal is expected and a move below the 2,090 could be considered a significant sell signal.
- Momentum is bearish; with price action falling below the 20 day moving average with a bearish crossover in the MACD indicator.
- Banc De Binary analysts predict that there will be a sharp retracement in U.S. stock markets, indicating a potential long-term downward movement in S&P Futures.