Job Reports, Bond Auctions And Other Key Themes To Watch This Week

Another week of mixed earnings and forecasts is in the books. The S&P 500 ($SPX) (SPY) finished up around 2% with the Friday high close coming to fruition again. Everyone's favorite stock Tesla (TSLA) did not fare as well this week with it closing down over 2%, this could start to be an inverse indicator to the market, which would be a very tradable event if the correlation maintains.

The Dow Jones Industrials Index ($DOWI) (DIA) was up +4.15% for the week while the Nasdaq 100 Index ($IUXX) (QQQ) was +8.84% higher.

Earnings are finally starting to slow as we phase out of the earnings season in earnest with just some large-cap stragglers set to report. While they are still important, especially if you are trading a name that's reporting, these more than likely will start to have a diminishing effect on the market. More so the case now that all the Tech giants are behind us. Other items that were of importance in the past have also seemingly stabilized for the time being, energy prices have leveled off for now (at least in the US) and while inflation is still rampant in the stores the populace seems to be coping with it about as well as can be expected. With all that said, here are 5 themes to watch in the market this week:

50 & 200 Day Moving Averages 

The spy has had the 50 DMA cross above the 200 DMA and is now again trading above it. This has historically been a bullish environment for stocks and could ripple out to the other markets if volume and trading continue to take place above them. The last time the 50 DMA was above the 200 DMA was in March of last year, but as they are lagging indicators there had already been a significant sell-off. By the same logic, we are already up off the recent lows so these averages will be of interest in days and weeks to come.

 Powell Testifying

Another week, another Fed speaker. They may be speaking every week now, but at any rate Fed chair Powell is set to testify at the Semi-Annual Monetary Report at the House this week. This will be over both Tuesday and Wednesday this week and is read in two parts: A prepared statement and a Q&A. It is possible that once the Q&A starts the markets could get volatile. Unscripted moments under oath have made for some very wild trading in the past.

10-Year Bond Auction

With inflation data coming in hot in the US over the past few weeks, the market is now pricing in higher probabilities of future rate hikes. The bond auction Wednesday at 1pm could be an insight into future hikes by watching what the highest rate offered on the government bonds are (typically used as the risk-free rate). Also watching the Bid To Cover ratio (the second number in the auction results) can give clues as to how confident investors are. This could also cause some short-term volatility if the results signal anything other than confidence in the rates. 

JOLTS

Job Openings and Labor Turnover Survey is out on Wednesday at 10 am, and in line with NFP which is released later that week, eyes will be on the jobs market. It is plausible that a tighter-than-expected market is viewed negatively by the market with all the work towards slowing down the inflation in everything except wages. As the market digests this news along with all the other events on Wednesday, it could be an exciting day for trading.

NFP

Non-Farm Employment Change (Non-Farm Payroll) comes out and is usually a volatile day in the markets. This will measure how robust the job market is and with such a strong emphasis on dampening a hot jobs market, anything stronger than anticipated could be construed as a negative by the market. 

Best of luck this week and don’t forget to check out my daily options article.

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