The S&P 500 opened up to a new all-time high this morning, trading as high 1,897.28 and above yesterday’s high near 1,893, and then selling got ugly as the day progressed, with the S&P 500 closing at 1,865.09, below yesterday’s low of 1,882.65.
Today would qualify amongst technicians as an outside reversal day.
The March employment report was roundly received as being pretty solid this morning, with 192,000 new new jobs created in March ’14, and another 37,000 jobs added from the two prior month’s being revised higher, so if there was a worry about this being a Fed matter, then we wouldn’t have seen a 1/2 to 3/4 point rally in the 10-year Treasury.
In addition, average hourly earnings in this morning’s report fell to 0% y/y growth, down from last month’s +0.2%. Accelerating wage growth was an area of worry for the Fed. Maybe not anymore.
We’ve had outside reversal days before in this 5-year stock market rally and they’ve quickly turned into false alarms.
The action in the Nasdaq today was truly ugly. The Russell 2000 which is dominated somewhat by biotech’s, looks broken. However, the biotech ETF, the BBH, isn’t yet through its 200 day moving average.
All this could be is a rotation out of 2013′s winners and into 2013′s laggards.
We’ll be out with our weekly earnings update tomorrow morning.
I don’t think S&P 500 earnings, or earnings growth is the issue regarding this correction.