October 2012 Early Gains Fade After September Unemployment Report, Will Support Levels Hold?
Will the current stock market rally last or has the Romney rally faded as a result of new unemployment numbers that came out last week? On Friday, the latest non-farm farm payroll report data showed the unemployment level had fallen to 7.8 percent due to an increase of 114,000 jobs. This may or may not have provided a short-term boost for President Obama and it’s unlikely to have a significant impact on equities.
Stocks prices have come down from the recent rally and there could be some profit taking after the prior week’s dip was shown to be a good buying opportunity for long-term equity holders. We suggested buying stocks after the dip in prices and that buying opportunity proved to be a good short-term entry point.
We are neutral-bullish on the stock market and expect stocks to pair some gains after the recent new rally. We are monitoring support levels from the last few days. If support levels hold from the recent buying opportunity, this could mean stocks may go higher led by small caps, tech and financials. Apple hasn’t made a short term rebound but Google could help to predict general market sentiment as it reached a new high last week.