The S&P500 crept up very slightly last week—by 0.29%. Volume was very light, implying that there was very little conviction behind the buying. And volatility was virtually unchanged; it’s still hovering at fairly complacent levels, but not quite as complacent as the levels reached in the summer of 2014.
Technically, the classic topping formation continues to develop. Last week’s small increase in price did nothing to change this. By Friday’s close, the S&P500 was still nearly where it was when the year started…well over three months ago. All that said, the 200 day moving average is still sloping upward, and the 50 day moving average is still comfortably above the 200 day. In other words, the bull market run is not over.
There were a lot of economic reports last week, starting with personal spending which missed expectations; personal income met expectations. The Dallas Fed manufacturing survey missed badly. Home prices, according to the Case Shiller home price index, did not rise at all last month (not seasonally adjusted figures). Chicago PMI missed very badly, as did ADP employment. ISM manufacturing also missed; construction spending missed as well. On the positive side, consumers—miraculously—are confident, at least according to the consumer confidence survey. Factory orders came in better than expected and initial jobless claims fell to new cyclical lows.
The big news of the week was the March payrolls report. Instead of seeing 247,000 new jobs created, only 126,000 jobs were generated, which was a huge miss….almost 50%. To add insult to injury, the prior two months also saw downward revisions; in other words, January and March weren’t as strong as initially reported. The unemployment rate held at 5.5% but that happened only because even more discouraged job seekers gave up looking and left the job force. The labor force participation rate fell from 62.8% to 62.7%, the lowest level seen since 1978! Adding the to the bad jobs data, the average workweek also fell a bit; in healthier labor markets, the average workweek holds steady or rises.
Finally, when last week, we noted that platinum was cheap, the expectation was that in the long run, it represented a good value, especially when compared to the price of gold. And while this long-term value is still there, it’s worth noting that platinum….since the post was published a week ago….has jumped about 8%. Yes, it can fall from here, in the short to intermediate term, but it’s nice to see such a big bump immediately after the call was made.