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For the second month in a row, the monthly private payrolls report from ADP exceeded estimates, coming in above 250K.  February’s print came in just shy of 300K at 298.4K, and it was well above the consensus print of 188K.  This was the highest monthly print since April 2014, the third highest print of the expansion, and the second best two-month reading (559.5k) in the history of the survey (going back to 2007).  No matter how you slice it, this indicator was strong.

As mentioned above, this month’s ADP report was the second straight better than expected print, and over the last three months, the actual reported number has exceeded expectations by an average of 55.7K.  As shown in the chart below, the three month average spread between the actual and estimated reading hasn’t been this positive since August 2012.

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The chart below is from today’s Morning Lineup, and shows where the S&P 500 is trading relative to its trading range. When the blue line is in the red zones, it indicates that the S&P 500 is trading at short-term overbought levels (pink=between one and two standard deviations above the 50-day moving average (DMA), while dark red = S&P 500 is more than two standard deviations above its 50-DMA).  Conversely, when the line is in the green zones, the market is short-term oversold (light green=between one and two standard deviations below the 50-DMA, while dark green = S&P 500 is more than two standard deviations below its 50-DMA).  After reaching levels well into ‘extreme’ overbought territory in the last few weeks, the S&P 500 has been working its way down to less overbought levels as the market trades sideways and its moving averages and trading ranges play catch up.  As of mid-day today, the S&P 500 is still trading at short-term overbought levels, but the degree to which it is overbought is the lowest in a month.  While this doesn’t suggest that the market is trading at attractive levels from a timing perspective, it illustrates a fact that we have cited numerous times in the past and that is that just because a market is overbought doesn’t necessarily mean that it has to sell-off in order to work off the overbought condition.  Corrections can occur in both price and time.

The Morning Lineup is not only one of our most popular daily reports, but it is also one of the most popular reports on Wall Street.  Investors read it religiously each day in order to fully prepare themselves for the market open.  There’s simply no better way to start the trading day!  To receive access to the Morning Lineup each trading day, sign up for a Bespoke Premium membership now.

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With an estimated 99% of total incremental digital advertising spending going to Facebook and Google (Alphabet) in the US, we were curious how the stronger dollar since 2014 and the emerging US ads duopoly was impacting the share of revenues these companies derive from the US. As shown below, since 2013 the trend for Alphabet has been for a growing share of US revenues. For Facebook, US revenue share is rising much slower but as our trend lines show, still trends towards higher US share of revenue. We should note that both Facebook and Google are seeing growing US revenue share despite very healthy ex-US revenue growth. As shown in the chart below, Facbook’s ex-US revenue has been rising over 50% per year while Alphabet’s is over 20% an accelerating.

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Last Thursday morning, the S&P 500 gapped higher and ultimately had its first 1%+ upside move of the year and its best day since the election.  The catalyst for the rally was what was called a ‘presidential’ speech from President Trump.  In the three trading days that have followed last Wednesday’s rally, though, the S&P 500 has been steadily drifting lower, and at the lows in Monday’s trading had completely filled the gap from Wednesday’s rally.  So far the ‘pre-gap’ highs have acted as support, but they will need to be watched in the short-term as there is little in the way of nearby downside support below.  Going forward, the most constructive scenario for the S&P 500 may be a sideways range to let its short-term moving averages and trading range play catch up.  Is anything ever that easy though?

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To see Bespoke’s full line of macro and micro research, sign up for one of our premium membership options today!  You won’t be disappointed.