• Bulls take charge at the start of a new month.
  • Risk-on while the case for an imminent Fed taper is dialled back. 

It was another solid performance put in by the bulls on Wednesday with a mid-week push into fresh closing highs for the NASDAQ and the S&P 500 not far behind. 

A low rate environment is propelling the tech sector forward as bets of an imminent taper from the Federal Reserve are dialled down underpinned by a shocking miss in the US ADP jobs report. 

Unofficially, the Dow Jones Industrial Average dropped 47.51 points, or 0.13%, to 35,313.22, the S&P 500 added 1.49 points, or 0.03%, to 4,524.17. The Nasdaq Composite put on 50.15 points, or 0.33%, to 15,309.38.

A report by ADP, published ahead of the US government's more comprehensive Nonfarm Payrolls employment report on Friday, has shown that private employers hired far fewer workers than expected in August.

In what might be considered a highly negative prelude to Friday's data, the private payrolls rising by 374,000 in August, well short of the 613,000 forecasts. 

Following on from a dovish speech made by the Fed's chair, Jerome Powell, last Friday, Wall Street's main indexes have hit record highs with the benchmark S&P 500 notching seven straight monthly gains.

Much will now depend on the Friday jobs report and analysts are already predicting a decelerating outcome with the pace of hiring slowing somewhat after the strong report in July.

''Payrolls probably slowed sharply after a 943k surge in July,'' analysts at TD Securities said.

''The pattern reflects less help from the seasonal adjustment process, particularly for the government sector, but underlying momentum appears to have faded as well.'

''That is the signal from the Homebase data, even as claims have been falling. Slowing would help the case for no tapering announcement in September,'' the analysts added. 

meanwhile, the next important data that could be the nail in the coffin for bears will be in the form of the US Consumer Price Index next week. 

The combination of the data and risks of the highly contagious Delta coronavirus variant will be weighed by investors as to whether the Fed will even be in a position to taper down the support of its quantitive easing programme in the coming months, a support that has been a life support machine to stocks throughout the pandemic. 

Dow daily chart

The bulls are in anticipation of a 21-50 day EMA bullish crossover:

The index hs painted a bullish dandle stick at the close with the confluence of trendline support not far behind at the 61.8% Fibonacci level.

A push higher from here will take the 21-EMA along for the ride, critical break up through the 50 EMA in what could be regarded as a highly bullish development for the start of Autumn's trade. 

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