Hey, Ross here:
A blowout jobs report on Friday showed that the US labor market was still strong – far stronger than expected.
Counterintuitively, this sent stocks plunging as investors assessed it meant the Fed would have less need to cut this year.
A stronger labor market could also lead to higher inflation, which would further put a damper on rate cuts.
The monthly CPI data comes out this Wednesday.
If it comes in hot, expect stocks to pull back further.
The price action tells me caution is warranted.
Chart of the Day
The S&P 500 has now fallen below the support level that’s been established since after the election.
Now, keep in mind that this is just one day – and it could very well bounce back.
We’ll have to wait for a few more days to get confirmation – especially with inflation data coming down the pipeline over the next couple days.
But still, caution is clearly warranted.
The percentage of stocks trading under their 50-day moving averages is also the lowest we’ve seen since April last year (though still higher than November 2023).
My counterintuitive advice for how to play this situation? I explain below.
Insight of the Day
Prepare for both a deeper pullback AND a rapid bounce.
On the surface, this might seem like an oxymoron.
But what I mean is – don’t be surprised if the market keeps pulling back (especially now that it’s violated support)…
But don’t be surprised if it rapidly bounces as well.
If you look at the chart of the percentage of stocks above their 50-day moving averages, you can see that such rapid dips during this bull market was quickly followed by a rapid bounce.
Is that a guarantee that’s what will happen? Of course not.
But don’t be surprised if it happens again.
In the meantime, I’m going LIVE tomorrow morning at 11 a.m. Eastern for a strategy session to show not only how to weather practically any stock market storm…
But how to potentially extract consistent gains of 2X, 4X, even 8X your money or more.
Click here to secure your spot for my live strategy session…
And I’ll see you at 11 a.m. ET Tuesday morning.
Remember, the big inflation print comes out Wednesday morning.
Don’t wait for that to happen.
See you tomorrow.
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Ross Givens
Editor, Stock Surge Daily
