Stocks are higher on the day yet again, as indexes are pushing upward on better-than-expected ADP Payroll numbers, jobless claims, and also ISM Non-Manufacturing numbers. While stocks are, in fact, higher on the day, gains across the index complex are only modest, and near yesterday’s intraday highs. Today’s leader is the Russell 2000, which is up by about 0.4% on the session, while the relative laggard is the Dow, up by a modest 0.2%. The big movers in today’s market are the global macro assets. Bonds are getting hit very hard, lower by over 1.2% as the 10-year yield creeps near the key 3% threshold. Metals are weak yet again, as gold is off 1.7% and silver is 1.1% lower for the day.
CHART OF THE DAY
Solarcity (SCTY) – The “other” Elon Musk company has been strong since its IPO, higher by over 200 percent since last December. The shares broke above the 50 level in May, but have since pulled back sharply. In fact, SCTY is lower by about 40% over the course of the past three months, but is beginning to show some signs of life here. The shares are bouncing near the 28 level, site of former resistance from early May and a gap higher. These areas could act as support going forward. Despite its strength, analysts and speculators are still skeptical with respect to the stock. Of the 3 analysts covering SCTY, all have it rated a “hold.” This creates future upgrade potential. Additionally, nearly 14% of the stock’s float is sold short. This creates the potential for future short-covering rallies, which could act as a tailwind.
I like a bullish entry here with a stop on a close below 28. I would initially target a move to 36, with 44 as a stretch target.
WHAT I’M EXPECTING
Given the muted reaction to today’s blowout economic numbers, I would suspect that the market is waiting on tomorrow’s jobs report before making its next thrust. This is the last major data point that we’ll see ahead of the Fed meeting in two weeks, so you could call tomorrow’s number the most important piece of data that we’ll get this year. I still prefer the downside, especially given the fact that the market is less than impressed with today’s great data.