- Jobs disappoint but stocks take to new highs nonetheless. - Jobs numbers bad, jobs numbers good, the underlying issues remain the same: quality, lack of participation. - Still no resolution of this latest lateral move at the highs, but the trend remains regardless of the overbought condition and overlay bullish investors surveys. - Plenty of upside potential in terms of stocks, you cannot write off a further upside move even if the billionaires are.
Broken record time.
It sounds so repetitive but that is because it is. The market action, that is. Again SP500 and DJ30 hit new highs. Despite that, however, the indices were basically unable to make headway last week. Moving up, moving laterally, no definitive breaks higher. The gains to this point and the action right now has some billionaires worried. This last move higher has been more frustrating than exciting as money flits around quickly from one sector to the next.
That said, there are still many stocks in position to move higher, some testing already good moves, others 'turning the corner' off of bases that started in the spring. If they continue their moves the rally continues, billionaires or not. Now if ALL the billionaires pull their money, well you have a self-fulfilling prophecy. Retail participation, despite all of the QE since 2009, is still light.
As of Friday, however, that didn't appear to matter. The jobs report was lousy, but it was explained away with a waive of Marc Zandi's hand. The basis? Zandi just feels the economy is better than 142K jobs. Well okay then. It must be. Others noted that August is the king of upside revisions for jobs. Seasonal adjustments tend to take it lower than reality, so they expect revisions back up to 200K. Oh, well I am relieved. 200K jobs is so strong, after all, right? Or is my memory foggy as to what actually ARE good jobs numbers? As I have noted before, the collective fogginess as to just what are good economic numbers makes people feel that 200K jobs are good. Now compared to 142K they are. Compared to historical US job creation they pretty much stink.
Whether the market bought the economic soothsayers' rationale, or it thought the Fed would be forced to dismiss any notion of 'pulling forward' any rate hikes, as noted above, it didn't matter. Stocks posted decent gains. Not big, but decent. Once again the market absorbed less than great news and moved higher. Despite sitting at the highs and struggling to move forward, they swallow the bad news, fight off some selling attempts, and at least hold gains. For now enough leaders are stepping forward to hold the gains, and if more that look positive pitch in, the upside continues. We too are somewhat skeptical of this level given the struggles, but if we see good stocks setting up great patterns, the move continues.
VOLUME: Backed off modestly, -3% NYSE, -5% NASDAQ.
A/D: NYSE 1.6:1, NASDAQ 1.2:1.
THE NEWS
Jobs miss, disappoint, but explained away. Cannot, however, explain away the underlying numbers that, sadly, show the same structural problems with the economy.
Non-Farm, August: 142K versus 200K expected, 212K July (from 209K). June and July revisions: -28K. Rate: 6.1% versus 6.2% July Average Hourly Earnings: 0.2% versus 0.0% July U6 (underemployed included): 12% from 12.2% Workweek: 34.5 versus 34.5 again . . . and again . . . and again.
Participation rate: Back to 1978 lows at 62.8% versus 62.9% in July.
Not in the labor force: All time high at 92.269M as 268K more citizens left the workforce.
142K found jobs in August. This as 268K LEFT the workforce.
Startling statistic fact 1: Since the recession started in 12/2007 13M people have left the workforce. During that same period only 768K jobs were added. Remember, the 'millions' of jobs the administration claimed to have created are simply fiction as we showed a couple of months back. The BLS assumptions vastly overstated the jobs created.
Jobs Quality: Just about one-half of the jobs created in August were in the lowest pay areas, i.e. Leisure and hospitality, Education/health, and temporary workers. Manufacturing: 0 jobs created Financial and information (highest paying sectors): 4K jobs created
Again, jobs are skewed to the lowest end of the salary scale.
Indeed, the WSJ reports that 53M citizens are now termed 'freelance' workers. These have no formal employment with a company but take jobs that come available. Some say they are consultants. Some say contract workers. They are, no doubt, temporary workers.
Conclusion: While the August numbers were classified as disappointing all around but also unimportant, the VERY important changes in the US labor market remain: 1) the trend toward temporary workers; 2) the unwillingness to hire new personnel for the high end jobs; I would posit the reason is there is no need for them given those companies with the business are those that don't hire, i.e. the large jobs losing corporations; 3) poor job quality with low end jobs predominate; 4) older workers are still getting most of the jobs, but sadly that is an offshoot of jobs quality and temporary workers as they work to make ends meet in the continuing aftermath of the 'great recession.' As the fellow who won the CNBC guess on the jobs number said, in most of the country, in truck stops and the small towns, there is no sense of recovery, just hanging on.
THE MARKET
LEADERSHIP
Semiconductors, telecom, financial are all contributing to market leadership. Big name biotechs slipped late last week (CELG, BIIB), but many smaller or less known names are working well. Just enough leaders continually emerge to hold the market up.
Semiconductors: A broad sector, but many are working well or are turning the corner. ASYS, MOSY, MTSN, BRCM, etc.
Telecom: Improving in general. MOBI surged Friday. CMTL.
Biotechs: Some good moves and some good setups as well. VRTX jumping. TGTX set up well. ARWR testing nicely. Some of the leaders are tired, but other biotechs are stepping it up.
MARKET STATISTICS
NASDAQ Stats: +20.61 points (+0.45%) to close at 4582.9 Volume: 1.604B (-4.46%)
Up Volume: 997.28M (+245.4M) Down Volume: 582.97M (-369.7M)
A/D and Hi/Lo: Advancers led 1.2 to 1 Previous Session: Decliners led 1.49 to 1
New Highs: 61 (-42) New Lows: 54 (+7)
S&P Stats: +10.06 points (+0.5%) to close at 2007.71 NYSE Volume: 609.7M (-2.81%)
Up Volume: 1.7B (+520M) Down Volume: 1.06B (-790M)
A/D and Hi/Lo: Advancers led 1.65 to 1 Previous Session: Decliners led 1.99 to 1
New Highs: 97 (-57) New Lows: 29 (+1)
DJ30 Stats: +67.78 points (+0.4%) to close at 17137.36
Bulls continue surging: 56.1% versus 52.1% versus 49.5%
Bears diving: 13.3% versus 15.1% versus 16.2%
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.
Bulls: 56.1% versus 52.5% 52.5% versus 49.5% versus 46.4% versus 50.5% versus 55.6% versus 56.5% versus 56.6% versus 60.6% versus 57.6% versus 60.2% versus 61.4% versus 62.6% versus 62.2% versus 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.
Bears: 13.3% versus 15.1% 15.1% versus 16.2% versus 16.2% versus 17.1% versus 16.2% versus 17.2% versus 15.1% versus 15.2% versus 16.1% versus 16.3% versus 17.2% versus 17.4% versus 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.
OTHER MARKETS
Bonds: 2.45% versus 2.45% 10 year.
After the massive surge the prior week, bonds sold off last week with the TLT falling back to the 50 day EMA. That is where it tested and held in late July, so we get a good look as to the strength of the move with this test.
Oil: 93.43, -1.02. Tried to rebound last week from the two months of selling, but failed at the 20 day EMA and sold off Friday. Closed at the mid-August lows, however, so may try to find support there this week.
Gold: 1269.30, +2.80. Continued the four week selloff but did gap lower Friday and reverse positive. Still range bounce for the past 5 months.
MONDAY
Skeptics are more abundant and with cause: you saw the bulls/bears breakdown, how bulls are surging again and bears are plunging again. Extremes indeed.
There is definitely rotation ongoing, and that is eroding some leaders. Others, however, are stepping up from semiconductors, financial, telecom, transports. Perhaps they won't be able to hold off the industrials and myriad of related sectors that are still heading lower, but so far they have.
We are skeptical as well and have closed several positions that struggled, keeping more nimble for the moment. Nonetheless, with stocks setting up and moving up, we play the moves if they continue to show up. Not only are stocks setting up and moving higher, the market thus far has shown the ability to face down one bad news story after another. The ability to handle bad news and continue on is of course an important attribute. It would seem that everyone is worried for the market but the market.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4582.90
Resistance: 4636 is the lower November 2012 trendline
Support: The 10 day EMA at 4560 The 20 day EMA at 4526 4486 is the July 2014 high The 50 day EMA at 4453 4372 is the March 2014 high The August low at 4321 4289 is the July 2000 recovery high 4277 is the March lower gap point 4246.55 is the January 2014 peak. Key level. The 200 day SMA at 4242 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 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
S&P 500: Closed at 2007.71
Resistance:
Support: 1991 is the July 2014 high The 10 day EMA at 1996 1996 is the December 2012 up trendline The 50 day EMA at 1967 1942 is the lower trendline from 11/2012 1905 is the August 2014 low 1902 from early May was the intraday all-time high. 1897 is the prior all-time high hit in April 2014 The 200 day SMA at 1884 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 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 17,137.36
Resistance: 17,152 is the mid-July post bear market high
Support: 17,068 is the early July 2014 peak 16,970 is the June 2014 former all-time high 16,946 is the June 2014 peak The 10 day EMA at 17,054 The 50 day EMA at 16,880 16,736 is the penultimate all-time high from May 2014 16,341 is the May low 16,334 is the August 2014 low 16,632 is the April 2014 all-time high 16,589 is the December 2013 all-time high 16,506 is the March 2014 peak The 200 day SMA at 16,467 16,257 is the January 2014 low 16,179 is the November 2013 peak. 15,739 is the December 2013 low 15,696 is the September 2013 peak 15,659 is the August 2013 peak
ECONOMIC CALENDAR
September 5 - Friday - Nonfarm Payrolls, August (8:30): 142K actual versus 223K expected, 212K prior (revised from 209K) - Nonfarm Private Payr, August (8:30): 134K actual versus 200K expected, 213K prior (revised from 198K) - Unemployment Rate, August (8:30): 6.1% actual versus 6.1% expected, 6.2% prior - Hourly Earnings, August (8:30): 0.2% actual versus 0.2% expected, 0.0% prior - Average Workweek, August (8:30): 34.5 actual versus 34.5 expected, 34.5 prior
September 8 - Monday - Consumer Credit, July (15:00): $17.8B expected, $17.3B prior
September 9 - Tuesday - JOLTS - Job Openings, July (10:00): 4.671M prior
September 10 - Wednesday - MBA Mortgage Index, 09/06 (7:00): 0.2% prior - Wholesale Inventorie, July (10:00): 0.5% expected, 0.3% prior - Crude Inventories, 09/06 (10:30): -0.905M prior
Market Data 
Markets 
AI
