May 18, 2023

Stocks Soar on Jobless Claims

Frank Cabibi

Unemployment claims came in less than expected this morning showing healthy signs for the US economy. Stocks have been on a tear since then as the NAS100 is up over 1% and SPX500 up 0.2%. Tech stocks look to be having the strongest day in the market.

EdgeFinder Analysis

JP225 is now a strong buy on the EdgeFinder at +6. The index touched all time highs around the $30,800s before returning some of those gains. This market is at a crucial decision point, and today's price behavior will help determine whether or not it will break to new highs and continue an uptrend, or pullback from profit-taking.

Having that said, sentiment for the Japanese stock market is still strong regardless of COT activity who is net short. However, institutions are slowly changing that by cutting back on short contracts and increasing the number of longs. This has been happening for several weeks but at a slow pace.

I'm showing the Historical Backtest feature instead of a score summary because the SPX500 is in a neutral-to-buy rating. Before this, price had been a strong sell of -6. The fact that the score is shifting this much indicates a possible reversal in EdgeFinder sentiment.

After a better than expected jobs number today, we might be seeing hopeful signs within the US economy. Although inflation did rise higher than expected last week, investors are still hopeful for a rate pause this coming June.

The same thing goes for NAS100 which has been ranked a strong sell back in March. As the score shifts - likely due to the trend readings and May's seasonality - so might the EF sentiment. Tech stocks have seen a massive run higher since March as the NASDAQ leads the US indices in gains.

What we need to look for is a perpetuation of a buy score. The EF can easily flip back to the sell side after a heavy bull run. This has been a key factor in the stock markets overall: after higher highs are established, price corrects to lower lows. But, if price can maintain its positive score, we might see some confirmation of more upside.

Retail Sentiment

According to retail sentiment, most of these indices are bullish. GER30 and JP225 are especially bullish while the US30 and UK100 are more mixed. It seems like the best chances investors will have are with the indices that are majority short from the retail side.

To the point I made earlier, here is a clearer visual on what is happening each between institutions on JP225. The net positive growth in long contracts have increased over time suggesting that COT is becoming increasingly bullish.

Fundamental Spotlight

Upon comparing the unemployment rates between Japan and the US, Japan's economy seems to be in a better position overall. The BOJ was adamant about keeping rates below zero while focusing on economic growth. This dovish tone is what is likely causing JP225 to be more bullish than the rest of the indices.

A1 Edgefinder

Save time looking for setups with the EdgeFinder's watchlist! In a glance, see the EdgeFinder's current top buys and top sells.

Discount code: 'READER'

Access Now


Trading Plan Template
Struggling to build a successful trading plan? Download our template to get started today!
Trading Gold & USD Before NFP

Gold is up nearly half a percent today while USD down a third of one as of 10:18 am EST. As we wait for the upcoming and looming NFP numbers this Friday, we can assess the economic data we already have. EdgeFinder Analysis The stock market sighed in relief after the debt ceiling bill finally […]

Read More
Can The Dollar Break This Pivotal Level?

The dollar flew higher last week as a result of resilient economic news along with a higher PCE than expected. Now the DXY has reached a decision point in price action. This week's NFP will help determine the sentiment around the potential June rate hike. Here is what we are looking at: EdgeFinder Analysis USDCAD […]

Read More
Dovish Banks Could Crash These Currencies

Considerably dovish news from central banks in the US and New Zealand has caused a major stir in the markets. Governor Orr and Vice Chairman Powell both released some reassuring news for the economy in the long term. But what does this mean for USD and NZD? EdgeFinder Analysis GBPNZD is a pair that should […]

Read More
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here
homesmartphonelaptop-phonemenu linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram