The markets had an exciting open this morning, after the U.S. Labor Department released better-than-expected nonfarm payroll data. The news of 236,000 additional jobs, when only 165,000 were expected, boosted futures and indices at the opening. But typically exciting opens are prone to be sold, especially after the market has been bullish the past 7-8 days.
The S&P 500 (SPX) hit a high of $1551 around the open and went as low as $1542. The historic high is $1576. There is still a lot of day left, but if we were to close below the first hour's low it would create a short-term "topping tail." That usually leads to some type of pause or correction.
Right now, the markets are very extended from their 8- and 21-day moving averages -- the SPX 8-day is $1532.
I am standing behind my "Road to S&P 1700" thesis, no what bears have said in the past year or two, but there will be some spots to navigate for intermediate sanity. If you try and be too cute, you might be left behind.
Metals reversed off lows as indices reversed off the highs. That has been the established relationship over the past few months.
Some positions I trimmed into strength and some stopped out for a loss. Taking profits in strength is prudent—but if you add to hedges after a pull-in, that can be frustrating.
*Disclosures: Scott J. Redler is Long: FB, BAC, F, SLB. Short: XLF, SPY. Flat: NKE, MS, MSFT, MGM, CROX, CIT, AAPL.
