In 2019, "Jobs Day" -- the day the non-farm payroll numbers are released -- has been a big day in the markets.
We have seen 11 such days so far this year for each month we've completed, and all but three months have had fairly big moves in the S&P 500. Seven days have been up and one has been down. The other three were mixed, although the S&P was flat to up all three times and Nasdaq was sometimes down on those days.
But, in general, Jobs Day has been a big mover and a big mover to the upside.
So you can imagine that I find it quite curious that for a day the market was essentially flat to up on Thursday, the put/call ratio was so high at 110%.
Why so much concern? I suppose some are concerned because the market just took a hit earlier this week. Or perhaps they are prepping for the big "tariff deadline" at the end of next week.
Either way the put/call ratio hasn't been high enough yet for long enough to get the 10-day moving average much higher than it was a few days ago. But we did get a reading of 70% for the equity put/call ratio on Tuesday, so that 10-day moving average has finally started upward. It is nowhere near the 70% reading that has often marked the point of "too much fear" in the market, but at least it is no longer under 60%, as it was two weeks ago.
I still think a "W" pattern is what we should look for in the stock market.
Away from that, let's look at the chart of the small caps vs. the large caps again (using iShares Russell 2000 Index (IWM) vs. SPDR S&P 500 exchange-traded fund trust (SPY) ). It has not broken over that line that dates back 18 months. But at the same time, it has not backed off this week, either, something it tends to do during market pullbacks. A push over this line changes things, the same way a push over the line in the ratio of the Bank Index relative to the S&P changed things two months ago.
Finally, I saw someone on television who was asked about the Transports the other day -- since they act so poorly. He stated that the transports didn't matter. I believe he even said it was an outdated indicator from the 1970s.
As I have explained before, it was first used as an economic indicator when Charles Dow wrote a series of articles on the subject nearly 100 years ago. The theory is that if the companies producing the goods are doing well, then the ones that are shipping them should do well, too. Pretty simple. It might be outdated, but I can recall hearing that argument in the late 1990s, as well. You know the drill: The Transports didn't matter, because the internet meant we didn't need to send stuff through the mail.
It turns out the lagging transports did matter, so let's not forget that all those packages you order on the internet to be delivered to your home need to be shipped. That's the truckers and freight companies. Unless your packages are materializing out of thin air, the Transports do matter.
Unless your packages are materializing out of thin air, Transports do matter.
And the Dow Jones Transportation Average is once again sitting at a critical juncture, or close to it. This 10,400 area is support, and it needs to hold. I think they are quite oversold, but so far that hasn't really helped them these last two days.