September jobs numbers came in lower than expected at 194,000, but it was a messy report with some big revisions to prior months and a sharp drop in the 'household' unemployment rate to 4.8%. The market has had a minor reaction to the news, but interest rates continue to rise, so there are still concerns about inflation despite the weak employment news.
Bonds have been under pressure since topping on September 22, and there is increased talk about the danger of stagnation which is the combination of higher inflation at the same time there is slowing growth. Despite this obvious bearish problem, stocks have not been too concerned about the issue. The bearish narrative has always been that higher rates and a less friendly Fed would be what eventually ends this long-running bull market, but so far, the market is dealing with this quite well.
The big question at this juncture is whether the lows that were hit on Wednesday morning before a debt ceiling deal was made will serve as short-term support as we move into earnings season. The indices are well above that level and are holding on to the subsequent gains quite well. We are seeing some consolidation and basing action today as we digest the earnings reports. The move in bonds is worrisome, but so far, that is not having any large impact on the market.
A little backing and filling at this point would be healthy, and as long as there is no retest of the lows, then we have a pretty good setup. It is important to distinguish between the chart patterns of the indices that have had relatively shallow corrections compared to many individual stocks that are already at substantial support levels.
I've done a little buying today, but I am still holding very high levels of cash. I expect to be able to deploy some of it next week as charts develop in front of earnings. Today I have added some IonQ (IONQ) , Beyond Air (XAIR) , Aehr Test Systems (AEHR) , Hut 8 Mining (HUT) , LendingClub (LC) , The Beauty Co (SKIN) , and a few other names, but I'm hoping to be much more aggressive next week.