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The Dow Industrial moves higher ahead of earnings season

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The Dow Industrial moves higher ahead of earnings season

Stocks in the US started off the week on a positive note, with futures prices pointing to a higher close on the heels of Friday’s better than expected payrolls data. Yields in the US continue to move higher, which reflects the strength in the US economy, and potential tapering of the FOMC’s bond purchase program.  On Wednesday investors will need to absorb the meeting minutes of the last Federal Reserve meeting which will likely show a more hawkish tone that the rhetoric that followed the meeting.

On Friday’s the Department of Labor released a better than expected non-farm payroll report.  Jobs increased by 195K in June, compared to the 160K expected by economists.  Revisions to the prior two periods increased by 70K, 50K in May and 20K in April.  The June unemployment rates remained unchanged in June, which was largely due to the increase in the participation rate from 63.5% from 63.4%.  Average hourly earnings increased by .4% which is a strong sign of increasing competition for labor.

Stocks continued to climb throughout the trading session notching up triple digit gains mid-day on the Dow Industrials ahead of Alcoa’s kickoff of the earnings season. After the closing bell Alcoa reported earnings beating the street estimates on the bottom line, and climbing 1% in after-hours trading.

The Dow Industrials experience another winning session, moving up .6% after recapturing the 50-day moving average on Friday.  Resistance is now seen near 15,400, while support is seen near the 50-day moving average near 15,082.

Momentum is increasing as the MACD generated a buy signal last week as the spread (the 12-day moving average minus the 26-day moving average) crossed above the 9-day moving average of the spread. The index moved from negative to positive territory confirming the buy signal.

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