Energy, Financials, basic Materials and Industrials remain as the market-leading sectors right now. With overstretched levels and inflation worries still going strong, defensive stocks provide a safer alternative to large-cap tech for investors. I’ve identified three stocks and one ETF in these sectors with recent pullbacks — and more in today’s stock market recap.
In today’s stock market recap, global markets are mostly lower as investors await U.S. jobs data for May.
The Employment Situation Summary is a monthly report that shows us how the job market is doing through the previous month. In April’s report, we expected 1 million jobs created for March. We missed the mark by a huge margin as the official number was only 266,000. The consensus for May’s jobs report was 650,000 jobs created, with hope the figure would come in closer to 1 million. Meanwhile, 559,000 jobs were created in May. This is a big improvement from April, but it lowers the economic bounce back projection the market was hoping for this summer.
The put/call ratio is now below 0.70, which means that call buying is at an extreme level. When this ratio is above 1 or below 0.70, we tend to see a reversal. Around 420 stocks in the S&P 500 are trading above their 50-day moving averages, telling us stocks are overbought in the index.
The Russell 2000 and the bond market are showing a strong negative correlation. Small caps traded higher and started moving sideways in late February. The bond market was moving lower and then started trading flat in March. Keep your eye on small-cap stocks as inflation picks up. If interest rates rise, the bond market will move lower. If the negative correlation holds strong, small caps will start climbing again.
Evercore Partners Inc. (NYSE: EVR) is an investment banking company. EVR has been on a steady rise since September 2020. It recently pulled back from all-time highs and will look to test those levels and continue its upward trend.
EVR has a one-year return of 129.81% and has moved 34.71% higher in 2021. Compare that to the 20.68% move in Financials stocks, and EVR is a leader in one of the strongest sectors right now.
I’ve also discovered a leader in online auctions with a pullback in its stock price and relative strength index. The next stock is the world’s largest restaurant company and is approaching its 50-day MA. The last play is a precious metals ETF with a recent pullback and hopes for higher prices in the near future.
In today’s video, I’ll go over why today’s Fed employment numbers are crucial… whether the put/call ratio is overbought… why momentum levels are impacting trading action… and the top pullbacks for Friday.
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