Analysis: AMN AMZN IRBT

In today's Action Alerts PLUS Daily Rundown, Bob Lang discusses how markets are shaping out following the July jobs report.

He also examines earnings from AMN Healthcare (AMN) and Amazon's (AMZN) deal to buy Roomba-maker iRobot (IRBT) for $1.7 billion.

BOB LANG: Good morning, Action Alerts PLUS members. It's August 5, 2022. And lots to cover today on the rundown, so let's get going here.

This morning, we got a nice read on the jobs report. 528,000 new jobs added in July. The unemployment rate dropped to about 3.5%. But wages, on the other hand, were up to 5.2%, which is quite a bit higher than most were expecting.

So I think all in all, the Fed is going to be looking at this jobs report with a bit of a skeptical eye, only to the extent that they're trying to get the economy to slow down a little bit more. And certainly, a jobs growth number like this, which is not bad for the economy, it's actually very, very strong, they're going to be looking at this and saying, you know what? Maybe we do need more rate hikes coming in.

And in fact, after this number came out I did take a look at the euro dollar futures, which is a proxy for the Fed funds futures, and those euro dollar futures plunged, which basically tells us that the Fed will be producing more rate hikes into the near future, probably at a lot faster rate than many had expected. And in fact, if you a look at the Fed funds futures right now, it's about a 70% chance now of a 75 basis point rate hike at the next meeting in September. And we're looking at about another 50 basis points to tack on to the end of the year the last two meetings in November, December.

So we're talking about 125 basis points here for the next four or five months. But this is a good jobs number. It means the economy is actually pretty strong right now. It is just the opposite of what the Fed is trying to get accomplished here.

So for today's trading action, let's talk about the technicals here. We are seeing the markets quite a bit overbought right now. Oscillators are still ticking higher at levels that we hadn't seen in about two or three months, and relative strength is high.

Everything is pointing towards the market needing a bit of a cool down, maybe a little bit of corrective action. Volatility has been running down since the middle part of June. And we did have a buy signal, intermediate buy signal on volatility yesterday, but that still, with an overbought reading like this right now, it's going to catch people looking the wrong way, and actually, that's probably happening today. We see the markets are down, oh, about a 1/4 of a percent right now. They were down quite a bit earlier this morning.

So moving to a specific name in the AAP portfolio, we have AMN, which reported their earnings last night, and beat on the top and the bottom line. And we can look at the JOLTS report earlier this week and the jobs report this morning to show us that this is a company that has some robust growth ahead of it and nice long runway into the end of the year for growth. And we like the stock.

We think it's going to make a run back up towards the 125, 130 area, which it was just at just a short week and a half ago. So we did see some profit-taking on the name recently, which is normal when you see a stock that runs 40% to 50% like this one has. But we still like the prospects for AMN going forward.

And then, finally, Amazon had some breaking news before the market opened this morning. They've made an acquisition. They bought a company called iRobot for about $61 a share in cash. This is the company that has those robotic vacuums.

Amazon has made these sort of strategic-type acquisitions in the past. $1.7 billion acquisition, of course, for Amazon is just a drop in the bucket, just a small one. But perhaps they have some plans to use iRobot with some of their other products as well, too. So it looks like a pretty good move for Amazon. The stock has been up real strong for the past week, week and a half, and we still like the name going forward.

So that's going to be it. We're going to wrap it up here. Have a great weekend, everyone, and thanks for joining me today. And we'll see you guys all on Monday.