- Jobs decent (read mediocre), but some saying 'strong', 'great.' Jobs, as beauty, is in the beholder's eyes.
- How strong jobs? Earnings? Companies?
- Still plenty of leaders, some new and some recycled, in the market, providing upside impetus.
Mediocre data continues, but in the new normal, mediocrity is 'strong' or 'great.'
Yes the jobs report was out and it was down but close to expectations. As I noted Friday in the alerts, it was decent. Decent is a nice way of saying mediocre. The jobs market has feet of clay, unable to make any moves and certainly has no traction.
Yet the adjectives describing the report were much more glowing. Heck even Investor's Business Daily headlined 'strong' jobs report. Wow, when IBD accepts mediocre as strong there is indeed a new normal where we accept crap as gold. Or at least as in China, tungsten. Yes, someone bought a cargo container of gold and when it arrived it was found to be loaded with something that was, while not worthless, nowhere near the value of what it should have been. The jobs numbers are not worthless, they are just nowhere near where they should be.
217K versus 220K versus 282K (from 288K).
Unemployment rate: 6.3% versus 6.4% expected, 6.3% prior.
Participation held at that record low 62.8%. Racing back to the jobs market, eh?
Certainly it was not a blast upside in new jobs as many had expected (read hoped for) after the harsh Q1 weather. Larry Kudlow made this clear as he summed it up in the numbers: based upon year/year average hourly earnings the jobs market was no change from Q1.
Indeed, things got worse. While April held out a glimmer that jobs quality was improving, May dispelled that with more than half of the jobs (116K) coming from the lowest paying, education and health, Leisure and hospitality, and Temporary help services.
All jobs recovered?
Much news was made of finally recovering all the jobs lost in the Great Recession. That is a terribly misleading statistic because it does not account for the new people entering the workforce since the recession started. That, however, is not the real problem.
Where the jobs are: As noted before, the all-important age 24 to 54 groups are still over 2M jobs LESS THAN where they were in 2007. The most powerful earners as a group are still well below their peak level.
For every jobs produced, 1 person has left the workforce. Thus, since 2007, the total number of jobs is unchanged, but 12.8M people have left the workforce during that 2007 to 2014 period. Over 92M working aged citizens are STILL OUT OF THE WORKFORCE.
92M out of work force
27.2M part-time workers
Total: 129M not employed or underemployed versus 118.7M full time jobs. What a recovery!
We have a permanent non-working class in our country that is 40% of the entire population. How can this be considered even a weak recovery given that statistic?
If that is a representation of what is considered strong, we truly are Europe and also Japan. That is mediocre just as GDP is mediocre, wages are mediocre, etc. The devastation to small business and accordingly the middle class (through the jobs and wealth created with startups) is almost complete.
Moreover, are the companies we hear about as 'strong' on CNBC, Bloomberg, etc. really that strong? While Q1 was seen as a throwaway because of the weather, as just discussed, the May jobs report saw not surge. Recall April was up to 288K but that was believed to be due to some deferred hiring in Q1. That did not continue and thus Q2 could be a repeat.
Look at Q1's earnings: -3.4% overall on SP500, falling from $28.25 to $27.32. These are supposedly the strong companies, but they are not all that strong are they? Stock buybacks have kept prices high. Now mergers and acquisition speculation is keeping prices high. Earnings are down, REVENUES continue to miss more than hit, yet stock prices are rising, aided by buybacks and still loose monetary policy.
I don't want to say it is totally smoke and mirrors, but a common sense look at the numbers from when our economy was truly 'strong' versus now and you see the media is trumpeting mediocrity.
"I had a vision that a great country built upon this place would forget how it became great and would decline as it accepted worse and worse economic growth as inevitable. A shame really. Now, I will give up the fort to the French. Why? Because the great country in my vision sure the hell wasn't France! Ha! To the pub then."
The 'gray hair' British general in 'The Last of the Mohicans' confided in his subordinate officers that he would have never believed a British commander would not come to the aid of another British regimen. Similarly I never thought, particularly after we recovered so sharply post-1970's, that we would ever forget what our economy can really do when unleashed. It appears we have truly abandoned the one who brought us to the dance.
Is it any wonder, as reported Thursday, that CNN found that most US citizens asked believe the American Dream is now dead?
Stocks did not seem to mind that much. Flat going into the number, futures jumped upon its release and traded sideways to the open. When the bell rang, stocks rallied into midday. A four hour lateral move to the close held the gains.
SP500 8.98, 0.45%
NASDAQ 25.17, 0.59%
DJ30 88.17, 0.52%
Volume: NYSE -5%, NASDAQ -15%
A/D Still nice: NYSE 2.8:1, NASDAQ 2.5:1
The upside continued into the weekend with no hits of selling as the indices spent the week knocking down some resistance.
NASDAQ: Continued the break above the January peak. Not a bad at all, converting the potential head and shoulders into what looks like a cup with handle from March. Not a ton of volume, but volume hasn't scared anyone on any of the rallies.
RUTX: Russell came to life on the week, exploding off the 200 day SMA Thursday, moving out of a 9 week inverted head and shoulders. Continued the move higher Friday. Ironically, RUTX has the January high to worry about now, the same one NASDAQ moved through.
SOX: Two weeks upside reasserted SOX as a market leader. Solid rally, gapping to a tight doji Friday.
SP500, DJ30: More upside, renewing the move with Thursday's strong run, adding more Friday.
SP400: The midcaps came to life last week along with the small caps. Broke higher Wednesday from its lateral move, then the big Thursday rally. Halfway up in the channel.
Technology not bad: STX, AKAM
Big names: Some good, some not quite ready. NFLX up on the week but looks winded with a doji. GOOG broke higher Thursday, added some Friday. AAPL enjoyed a strong week but is tired as well, gapping upside then reversing the move Friday. Overall quite solid.
Internet/Internet based: VIPS posted a great week. TRIP outstanding. BIDU surged Friday. TRLA breaking higher. FB still in great position to do the same.
Energy: Improved on the week, e.g. PXD, SYRG, CRR.
Drugs/Healthcare: Seeing lots of improving patterns, e.g. ILMN.
Euro/Dollar: Tested the 20 day EMA on the low, bounced, holding the move over the early April peak. Trading in the top half of the range after the big May bounce off the bottom of the range.
1.3644 versus 1.3664 versus 1.3601 versus 1.3630 versus 1.3597 versus 1.633 versus 1.3603 versus 1.3593 versus 1.3635 versus 1.3632 versus 1.3654 versus 1.3687 versus 1.3704 versus 1.3170 versus 1.3698 versus 1.3716 versus 1.3713 versus 1.3702 versus 1.3754 versus 1.3853 versus 1.3914
Dollar/Yen: Tested the 50 day EMA on the low, bouncing upside. Nice test of the move higher and ready to continue upside.
102.540 versus 102.415 versus 102.7395 versus 102.5350 versus 102.365 versus 101.7765 versus 101.775 versus 101.7435 versus 101.985 versus 101.98 versus 101.80 versus 101.37 versus 101.2895 versus 101.40 versus 102.65 versus 101.49 versus 101.52 versus 101.84 versus 102.27 versus 102.15 versus 101.73 versus 101.81 versus 101.53 versus 101.73 versus 101.68 versus 102.11
Bonds: Gapped upside then faded back to flat. Still stuck at the 50 day EMA test.
10 year: 2.59% versus 2.58% versus 2.60% versus 2.60% versus 2.53% versus 2.47% versus 2.47% versus 2.44% versus 2.52% versus 2.53% versus 2.55% versus 2.53% versus 2.51% versus 2.54% versus 2.51% versus 2.50% versus 2.54% versus 2.61% versus 2.66% versus 2.62% versus 2.60% versus 2.59% versus 2.59% versus 2.61% versus 2.59% versus 2.67% versus 2.69% versus 2.70% versus 2.67% versus 2.68% versus 2.69% versus 2.73% versus 2.71% versus 2.72% versus 2.64% versus 2.62% versus 2.64% versus 2.62% versus 2.65% versus 2.69% versus 2.68% versus 2.70% versus 2.73% versus 2.79%
Oil: 102.67, +0.08. Holding the test over the 50 day EMA, trying to put in a higher low in the middle of the trading range.
Gold: 1252.70, -0.50. Gold couldn't add anything to the Thursday bounce from the selloff.
Stats: +25.17 points (+0.59%) to close at 4321.4
Volume: 1.614B (-14.87%)
Up Volume: 1.11B (-230M)
Down Volume: 470.14M (-95.77M)
A/D and Hi/Lo: Advancers led 2.52 to 1
Previous Session: Advancers led 3.62 to 1
New Highs: 153 (+30)
New Lows: 24 (-22)
Stats: +8.98 points (+0.46%) to close at 1949.44
NYSE Volume: 530M (-5.19%)
A/D and Hi/Lo: Advancers led 2.87 to 1
Previous Session: Advancers led 3.44 to 1
New Highs: 356 (+60)
New Lows: 8 (-10)
Stats: +88.17 points (+0.52%) to close at 16924.28
VIX: 10.73; -0.95
VXN: 13.21; -0.45
VXO: 10.27; -0.88
Put/Call Ratio (CBOE): 0.92; +0.17
Bulls and Bears:
Big jump in bulls, back up to the level that triggered selloffs. 62.2% versus 58.3%
Bears hold the line: 17.4% versus 17.3% versus 18.3% versus 19.4%
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Note the extreme bullishness: it was this high in 2007 at the crash, in early 2005 as well.
58.3% versus 57.2% versus 55.1 versus 55.7 versus 54.7 versus 51.6 versus 50.5 versus 54.6% versus 50.5 versus 54.7% 52.0% 54.6% 53.5% 46.5% 41.8% 45.9% 53.1% 57.6 56.1 60.6% 61.6% 60.0% 58.2% 57.1% 55.7% 53.6% 52.6% 55.2% 52.6 49.5 42.3% 45.4 46.4% 44.3% 42.3% 37.1% 37.1% 38.1% 43.3%.
Background: Last undercut 35%, the threshold for bullishness, in early June 2012.
17.3% versus 18.3% versus 19.4% versus 20.6% versus 19.7% versus 21.7% versus 20.6 versus 18.6% 18.6% 17.5% 17.4% 15.1% 17.2% 17.2% 17.4% 17.4% 15.3% 15.1 15.3% 15.2% 15.2% 14.0 14.3 14.3% 14.4 15.5 15.5% 15.6% 16.5% 18.5 21.6% 20.6% 18.6% 20.6% 21.6% 22.7% 23.7% 23.8% 21.6%.
Background: Over 35% is the threshold to be really be a good upside indicator. For reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.
The big news is out in terms of economic data. This coming week retail sales on Thursday area the big news. Can the consumer continue spending in these economic conditions? Friday saw consumer credit surge as consumers put a lot more debt on their cards. Half full or half empty? Half full: they are confident enough to spend it. Half empty: they have NO CHOICE but to use the plastic to get by.
For now the stock market takes everything as a positive. Thus the new breaks higher last week with NASDAQ, RUTX, SOX up but not extended just yet. SP500, DJ30 are up three weeks; they appear extended.
Of course extended stocks or indices can continue extending those gains. Moreover, in a healthy rally, stocks come in waves with different groups or sectors pushing to the front out of quality patterns that set up while other stocks are moving. Indeed, this weekend we see biotechs, drugs, and other healthcare setting up patterns again along with the other leaders still bringing in new solid plays, e.g. electronics/chips, technology.
So many people are convinced the market is at a top yet the patterns in many stocks in many sectors suggest that is not the case. Solid, 'ordinary' stocks such as AKAM and STX broke sharply higher last week, joining the big names and others leading. As long as new stocks come to the fore and push higher, the rally has legs. It may seem illogical, but near term in the market an individual's logic has little to do with market moves.
That being the case, we will continue to take gain when it presents itself on our positions taken earlier in the rally, and we will also continue to move into stocks that present solid moves out of solid patterns.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4321.40
4372 is the March 2014 high
4384 is the lower November 2012 trendline
4289 is the July 2000 recovery high
4277 is the March lower gap point
4246.55 is the January 2014 peak. Key level.
The 50 day EMA at 4173
4131 is the March 2014 low
4104 is the lower gap point from 12/20/13
4070 is the series of highs from late November/early December
The 200 day SMA at 4042
3991 is the prior November 2013 high and the post-bear market high.
3968 is the February 2014 low
3946 is the April 2014 intraday low
3855 is the November low
3819 is the early October high
3801 is the September 2013 high.
The October low at 3750
3697 is the August high and a prior post-bear market high in the recovery.
S&P 500: Closed at 1949.44
1907 is the December 2012 up trendline
1902 from early May was the intraday all-time high.
1897 is the prior all-time high hit in April 2014
The 50 day EMA at 1887
1855 is the lower trendline from 11/2012
1883.57 is the early March high.
The December and January highs at 1848
The April 2014 low at 1814
1808 is the November and December 2013 twin peaks
The 200 day SMA at 1802
1775.22 is the October prior all-time high
1768 is the December 3013 low
1738 is the February 2014 low
1730 is the September 2013 peak
1710 is the August 2013 peak.
1698 to 1700 are the July and August interim highs
1687 is the May high and post-bear market high
1685 is the mid-August 2013 upper gap point
Dow: Closed at 16,924.28
16,995 is a lower trendline off the 11/2012 low
16,736 is the all-time high from May 2014
16,632 is the April 2014 all-time high
16,589 is the December 2013 all-time high
The 50 day EMA at 16,525
16,506 is the March 2014 peak
16,257 is the January 2014 low
16,179 is the November 2013 peak.
The 200 day SMA at 15,973
15,739 is the December 2013 low
15,696 is the September 2013 peak
15,659 is the August 2013 peak
15,542 is the May 2013 intraday high
15,340 is the February 2014 low
15,318 is the June closing high
15,050 from the August 2013 interim recovery high
14,888 is the April peak and prior all-time high
14,844 is the June intraday low
14,762 is the August 2013 low
14,551 is the June 2013 intraday low on the selloff (14,659 closing)
June 6 - Friday
Nonfarm Payrolls, May (8:30): 217K actual versus 220K expected, 282K prior (revised from 288K)
Nonfarm Private Payr, May (8:30): 216K actual versus 230K expected, 270K prior (revised from 273K)
Unemployment Rate, May (8:30): 6.3% actual versus 6.4% expected, 6.3% prior
Hourly Earnings, May (8:30): 0.2% actual versus 0.2% expected, 0.0% prior
Average Workweek, May (8:30): 34.5 actual versus 34.5 expected, 34.5 prior
Consumer Credit, April (15:00): $26.8B actual versus $15.0B expected, $19.5B prior (revised from $17.5B)
Wholesale Inventories, April (10:00): 0.3% expected, 1.1% prior
JOLTS - Job Openings, April (10:00): 4.014M prior
June 11 - Wednesday
MBA Mortgage Index, 06/07 (7:00): -3.1% prior
Crude Inventories, 06/07 (10:30): -3.431M prior
Treasury Budget, May (14:00): -$138.7B prior
June 12 - Thursday
Initial Claims, 06/07 (8:30): 315K expected, 312K prior
Continuing Claims, 06/07 (8:30): 2638K expected, 2603K prior
Retail Sales, May (8:30): 0.7% expected, 0.1% prior
Retail Sales ex-auto, May (8:30): 0.4% expected, 0.0% prior
Export Prices ex-ag., May (8:30): -1.2% prior
Import Prices ex-oil, May (8:30): 0.0% prior
Business Inventories, April (10:00): 0.4% expected, 0.4% prior
Natural Gas Inventor, 06/07 (10:30)
June 13 - Friday
PPI, May (8:30): 0.2% expected, 0.6% prior
Core PPI, May (8:30): 0.1% expected, 0.5% prior
Michigan Sentiment Preliminary, June (9:55): 82.9 expected, 81.9 prior
By: Jon Johnson, Editor
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