The April employment report was released before the market open today, and the better-than-expected numbers caused a big spike in equity markets. Not only did this month’s number beat expectations, last month’s jobs number was revised higher–further evidence that the jobs situation may be a little better than sentiment may currently indicate. Today’s spike sent the S&P 500 to new all-time highs, and above the key psychological 1600 level that’s been in the crosshairs of many market participants.
At present levels, we’re being led higher by small caps, as the Russell 2000 is nearly 2% higher on the day. All other major indexes are up significantly as well, each over 1%. After holding their bid for some time, bonds are seeing major weakness today, down over 2% on the session. Metals are mixed, as gold is slightly lower, while silver is up nearly 1% for the session.
CHART OF THE DAY
BMC Software (BMC) – The software company has been an outperformer this year, up about 16% since January. The shares recently spike to new multiyear highs and have since consolidated, offering a nice long entry. Despite its strength, short interest on BMC remains elevated at 8% of the equity’s float. Should BMC continue to travel higher, there exists the potential for short-covering rallies going forward.
I like a long entry here with a stop on a close below 44.50. I would initially target a move to 48, with 55 as a stretch target.
WHAT I’M EXPECTING
Continued pressure by the bulls. As traders continue to try and pick tops(okay, I’m guilty at least once this past month), the bulls are still winning the battle. Until we can see a significant break below the 50-day moving average on the S&P 500, pullbacks should be bought. If you do try some bearish plays, do not get greedy with your profits and protect any gains that you may have.