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Can You Take Me Higher?

Monday, March 13, 2017

Today's Spotlight Market

A strong nonfarm employment report released Friday is likely to be the final strong economic report that will spur the Federal Reserve to raise interest rates this week. The Fed begins a two-day meeting starting tomorrow, and Fed Fund Futures are showing an 89% chance of a rate hike.

Fundamentals

The United States added 235,000 jobs in February, marking the 94th consecutive month of job growth. The unemployment rate fell by 0.1%, decreasing to 4.7% from 4.8%. Job growth was strong across all sectors, except retail. Unseasonably mild weather in most of the US helped the construction industry ad 58,000 jobs. Retail lost 26,000 jobs, perhaps as retailers attempt to adjust to the increase in online sales. Year-over-year average hourly wages showed a growth of 2.8%, perhaps indicating wage push inflation. The labor force participation rate also increased in February to 63%.

Technical Notes

Although US equity markets were down for last week, the overall bullish trend continues in the E-mini S&P 500. The faster 20-day moving average is providing support, and the slope is turning sharply upward. The 20-day SMA is also well above the 50-day SMA, another bullish sign. 14-day RSI is at a bullish 64.81, but not yet into overbought territory.

Dale Jennings, Commodity Analyst