Economy: Bad employment number
Despite the bad NFP number for June, the average pace of change in private payrolls is showing just some normal volatility as it did in previous expansion cycles.
S&P500: The market is ready to power higher
Previous up legs closed higher almost every week after the inital rally off the lows.
Shorter term, the 1341 SPX support on the daily chart was not broken while the market registered a normal 20 points correction:
One Week, One Stock: Intercontinental Exchange (ICE) - looking good
Yearly sales growth is expected to register a mild slowdown in FY 2012, which does not look ominous and should not bring earnings surprises.
Using the historical P/E range and an estimate for the EPS at the end of FY12, I got an average price target of 166.
I discounted the Zacks.com EPS estimate by 10% in order to be conservative. At 128, Friday's close, the stock looks undervalued. Also favoring the upside is the recent trend of estimated EPS revisions:
source: Zacks.com
Looking Forward
Next week we get a Ben Bernanke testimony, a retail sales report and a CPI report among other data. I think the market will anticipate these events by moving up.
In light of the recent employment report, I think the market will rise into BB's speech. Also, there are strong expectations from the retail sales report and I expect the CPI to come in showing a further slowdown in its average pace of change.
Ideas
(continued from last week's wrap up, ideas section)
The intraday movements of the put/call ratio would have suggested long entries starting at 2:00 PM, eastern time. Not bad!
Trading
I am long from 1330.5 ES (entry posted here).
I will be looking for opportunities to further add to this position as the market confirms Friday's after-the-lunch strength.
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