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Jobless claims fall by 15,000

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Today's report from the Labor Department show jobless claims fell by 15,000 in the latest week to 427,000. Economists had expected today's report to show a total jobless claims number closer to the 450,000 level. Continuous claims for unemployment remain lofty, at 3.73 million, but down marginally from last weeks level of 3.8 million.

The closely watched 4-week moving average of initial claims fell to 454,250 from 474,250.

10-year YIELD chart -

It's beginning to look as if stocks have moved ahead of the recent YIELD action in bonds. Today's jump higher in YIELD for the 10-year ($TNX.X) has yet to spark any type of rally in stocks. As we've pointed out in recent sessions, the NASDAQ-100 bullish percent along with the Semiconductor sector bullish percent have both achieved percentages above the 70% level and are just "overbought" and it seems as if the MARKET just isn't willing to push some of these overbought indexes and sectors higher. Namely "big technology."

What equity bulls don't want to see near-term is what took place the last time the 10-year YIELD broke above the 200-day MA for several sessions, but couldn't push higher. What an equity bulls would want to see is either a continued sell-off in bonds or some consolidation in YIELD and then a further push higher. In recent sessions, there has been a large amount of selling in the bond market and cash has been raised.

Should we not see a total roll back in to the bond market in the next week or so, then my thinking is that there's going to be some cash ready to buy stocks should we continue to see profit taking.

Again... the bullish percent charts of the semiconductor sector from Dorsey/Wright and Associates, along with the bullish percent chart of the NASDAQ-100 ($BPNDX) from Stockcharts.com tell us that bulls have the bulk of the risk in these two areas of the market right now and profit taking should be occurring. Remember, smart money sells risk.

Jeff Bailey
Senior Market Technician
Option Investor

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