Fear Does Not Exist in This Doji

A doji is a single candlestick pattern in which the open and close prices of the security or market are the same or very close to it. (Investopedia)

U.S. Job growth was revised down by a whopping 911,000 through March of this year, indicative of erroneous views by many about a robust goldilocks economy in recent quarters. Mind you, this applies to both sides of the aisle inside the Beltway, as both Biden and Trump White Houses deserve more than enough blame to go around, not to mention Congress and, of course, The Fed. 

The market's reaction to this shocking turn of macro events? Virtually nothing, to the surprise of almost no one at this point.

As you can see on the updated SPY (ETF for the S&P 500 Index) daily chart, below, the arrow points to today's candle, thus far.

On top of yesterday's "doji," we have another particularly small-sized doji candle in the works, yawning off virtually everything. The most likely explanation for the non-reaction reaction (besides being in a bubble) to the jobs reversion is that the market is far more focused on pricing in next week's rate cut with 50bps now perhaps even more likely given the weakening labor market. 

Of course, the inflation data later this week can sway those expectations. However, we know this Fed, with its inherent dovish leanings, can always point to the labor market to justify 50bps in lieu of a moderate 25bps cut. 

Overall, there is simply no concern and no fear in equities, overall. Sure, prior leaders like CAVA CMG LULU SBUX are struggling mightily. But the major indices and mega cap tech stocks, on top of the hot money names like HOOD, simply are not perturbed by anything, at least not yet. 

There is another interpretation of the "doji" that is overlooked, however, especially in this context. The small doji candles could easily betray a moment in time where buyers are simply out of gas, huffing and puffing in the final days of the uptrend. For that scenario to materialize, we need to see the ultimate sell-the-news reaction to next week's likely rate cut, just as the majority view it as a panacea for markets and the economy.