It was good to see so much momentum bring up the rear for once yesterday. Moreover, money rotated into unloved sectors rather than the sidelines. That’s bullish.  

Spreading the Wealth

Advancers dominated in Financials (XLF) and Real Estate (XLRE), and even Technology (XLK) saw more advancers than decliners. Meanwhile, the S&P 500 is out of the relative strength index (RSI) overbought territory, even after a very encouraging intraday reversal that closed higher.

Rotation on Deck

Nosedives: every sector, except Technology, has been in a nosedive against the S&P 500 – it was great to see investors do some tire-kicking. When the time is right, cash could exit in the high-flyers, but stay in the game.

The semis (SOX) pulled back yesterday, and you needed a magnifying glass to even notice it on the charts. This rally story has more chapters to be written.

Today’s Session

Major indices are looking to open under moderate weakness.

Jobs Data

Non-farm payrolls rose 172K in May following an upwardly revised 179K increase in April and well ahead of the expected 85K increase.

Notable gains occurred in leisure and hospitality (+70K), local government (+55K), construction (+17K), health care and social assistance (+47.2K), and manufacturing (+7K). On the other end, notable losses occurred in financial services (-22K) and non-durable goods manufacturing (-10K).

May’s unemployment rate remained unchanged at 4.3%, in-line with forecasts.

The labor force grew by 83,000, while labor participation remained unchanged at 61.8%.

Additionally, average hourly earnings rose by 3.4% YoY coming in-line with estimates. Average weekly hours worked also came in flat and in-line with estimates at 34.3.

Following the report the Ten Year Treasury Yield (TNX) is up 5.9 basis points and once again crossing the 4.5% level.

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