Bond Yields Plunge on Employment Report. Plus, a Friday Bonus Momentum Pick.

Stocks are still waiting for the Fed.

The employment report had something in it for just about everyone. For the stock market, the most important development was that the bond market liked the number and yields broke to a new low.

As I suggested yesterday, the bond market’s response would likely set the tone for other markets. For stocks, the report was soft enough to keep the possibility of a December 18 rate cut from the Fed alive. Of course, the CPI number, due out before the meeting may change the odds. But for now, it’s good enough.

The U.S. Ten Year Note yield (TNX) still has room to fall further. It has broken below the 50 and 200-day moving averages and has enough room to hit 4%. What happens there, is a tough call since the RSI is likely to be near 30 (oversold) by then. RSI readings on TNX of 30 usually trigger higher yields.

And while bond traders rejoiced, stock traders are taking a bit more nuanced- wait and see - approach to the number. The New York Stock Exchange Advance Decline Line (NYAD)’s response to the number was certainly muted, yet NYAD is still within reach of another new high, so the trend for stocks remains up until proven otherwise.

It’s still a stock picker’s market, though. So today, I’m adding a new Momentum pick on a tech stock which is about to break out.

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