The Trend Really Is Your Friend ... For Now

 | Jun 02, 2017 | 12:09 PM EDT
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On Thursday, the market rallied to new all-time highs following news that payroll processor, ADP, estimated that 253,000 jobs were added in May. This was well ahead of expectations of 180,000.

Today the Bureau of Labor Statistics (BLS) reported nonfarm payrolls of just 138,000 versus expectations of 185,000.

It would seem that if the market rallied on good jobs news on Thursday then it would react negatively to bad jobs news, from a more reliable source, on Friday. That hasn't happened. The market is up again today and is trending steadily higher to new all-time highs as I write.

So what is going on here?

The answer is something I've discussed a number of times recently. It isn't the news that matters to market players. It is the price action. The truth is that there is no real correlation between news flow and the stock market right now.

What moves the market is the need for money managers to put money to work. They see nearly ever news event as being an opportunity to buy. If there is a dip it's a buy, if there is good news it's a buy, if there is bad news it's a buy, if its total illogical it is a buy.

If you try to apply some simple logic to an event such as a poor jobs report you most likely will be wrong because it isn't a correlation that matters.

We have 2 to 1 positive breadth once again, almost a 1000 stocks hitting new all-time highs and only a 100 at 12-month lows. There has been a steady uptrend since the open and bears are being crushed once again.

All you need to know right now is a trite old saying "the trend is your friend'. Forget news, fundamentals, politics and everything else except the price action.

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