Fresh record highs for the Dow ahead of pricing data this week

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US Non-Farm Payrolls came in with a 531,000 reading that managed to comfortably beat roughly 450,000 expectations with its previous revised higher to 312,000. The unemployment rate a notch below estimates at 4.6%, the labor force participation rate unchanged at 61.6%, the employment-population ratio at 58.8%, and the worry over wage growth translating into higher inflationary adjustments coming in at 0.4% following consecutive strong 0.6% month-on-month readings.

But those figures came after the US Federal Reserve had already made its decision regarding tapering asset purchases. In energy, the OPEC+ meet was in focus, where they opted to keep their initial output cut unwinding program in play, meaning an additional 400,000 barrels per day for December, oil prices reacting by finishing the week lower in what were a few volatile sessions, over the weekend the US President saying that there were “other tools in the arsenal” to “deal with other countries at an appropriate time”.

On the fiscal front, the $1 trillion Senate-passed infrastructure bill was approved by the House on Friday evening, and pushing for the $1.75 trillion Build Back Better Act to be voted on next week, unlike the bipartisan infrastructure bill which doesn’t have Senate approval.

As for the week ahead, a lack of central bank announcements for the majors after the past couple of weeks, but there will be plenty of central bank speak for the majors, including the Fed’s Powell. For economic data, much of it having to do with pricing with PPI (Producer Price Index) figures out of the US tomorrow expected to rise 0.5% for the month of October and at 8.7% for the year after a year-on-year increase of 8.6% last time around, and CPI (Consumer Price Index) figures on Wednesday with September’s year-on-year reading at 5.4%, month-on-month to rise from 0.4% to 0.5% for October.

A US holiday towards the end of the week means we can expect it to get a bit lighter out of the US. More earnings will be on offer, though for US in value represents a much smaller portion of its market.

Dow technical analysis, overview, strategies, and levels

Fresh record highs for the Dow in what has become a familiar sight, though it took Friday's boost to take it above Thursday's daily first resistance and even then there was little on offer for contrarian strategies, from a weekly standpoint prices finishing above its previous weekly first resistance level to give conformist buy-breakout strategies the edge and keep a few of its technical boxes in this time frame green (they're all green on the daily).

Reopening companies enjoyed decent gains as coronavirus cases edged lower in the US, Boeing Co (All Sessions) the component on top with over 5% gains, followed by Visa Inc (All Sessions) and Walt Disney Co (All Sessions), Merck on the other end suffering near double-digit percentage losses (non-component Pfizer Inc (All Sessions) up over 10% after news of its pill being more effective).

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IG client* and CoT** sentiment for the Dow

CoT (Commitment of Traders report) speculators remains slight buy, longs up 2,175 lots outdoing a 420 lot increase in shorts, taking the percentage from 51% to 53%. For the remaining US indices they are slight buy US Tech 100 53% having shifted from slight sell 51%, majority long US 500 60%, and majority short US Russell 2000 61%.

Retail bias starts off the week unchanged from the start of last week with an extreme short 78% bias. They are also majority short the remaining six indices (S&P, Nasdaq, FTSE 100, Germany 40, and Australia 200).

Dow chart with retail and institutional sentiment

^{*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from the previous trading day.}

^{**CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.}