JOBS REPORT: US ECONOMY ADDED 204K JOBS IN OCTOBER
(Forbes)
Employers added 204,000 jobs in October, well above the
120,000 many economists expected. The unemployment rate was up slightly to 7.3%
from 7.2% in September. The labor force participation rate dropped to 62.8%
from 63.2%...Employment numbers were revised up for August from plus 193,000 to
plus 238,000. September numbers were also revised from 148,000 to 163,000.” Story at…http://www.forbes.com/sites/samanthasharf/2013/11/08/jobs-report-u-s-economy-added-204k-jobs-in-october/
BLS did not consider Federal workers unemployed in the
report since they were paid.
A TROUBLING ASPECT TO THE JOBS REPORT: LABOR
PARTIICIPATION GOING THE WRONG WAY
“…the unemployment rate could continue to fall, ‘but
largely for the wrong reason.’ ‘As people continue to leave the labor force,
rather than remain unemployed, the labor force participation rate is the lowest
it's been in 35 years,’ Bronars said. ‘Some of this is due to the aging of the
population, but participation should be increasing during a recovery as more
people find work.’ – Stephen Bronars, senior economist with Welch Consulting. Story at… http://abcnews.go.com/Business/october-jobs-report-shows-unemployment-rate-increased-73/story?id=20822924
FROM MISH SHEDLOCK (Global Economic Trend Analysis)
“…this month's numbers are extremely distorted due to
temporary layoffs. Next month we will have a better understanding of various
factors including the unemployment rate.” Mish has a complete, extremely
detailed analysis of the jobs report at… http://globaleconomicanalysis.blogspot.com/
MARKET REPORT
Thursday, the S&P was up 1.3% to 1771 (rounded).
VIX fell about 7% to 12.90 Thursday, the S&P was up 1.3% to 1771 (rounded).
Today was an odd day.
At 11AM, the S&P 500 was up more than 0.7%, but not so the internals. Market internals were down by every measure:
fewer stocks advancing, fewer new highs; negative tick; you name it. Up volume was higher than down, but that just
means the volume was going to stocks in the indices, because they were
advancing. Internals did improve on the
day, but not enough to make me positive on the market.
Today was another statistically significant day (based on
my statistical analysis of price-volume action.) That means on average (with a 62% correct
probability) the market will close down Monday.
This time I believe this mini-indicator may be correct (unlike yesterday
when I didn’t trust it - but it did correctly forecast today's up day), because the market internals are not confirming today’s
up-move. Today's end-of-day, market-internals data didn't improve the 10-day values that I use for the market internals review below.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing remained 45%. (A number below 50% for the 10-day average is
generally bad news for the market.)
New-highs outpaced new-lows, Friday, leaving the spread
(new-hi minus new-low) at +55 (it was +73 Thursday). The 10-day moving average of change in the
spread was minus 17. In other words over
the last 10-days, on average, the spread has decreased by 17 each day.
Market Internals remain negative, but today the
dip-buyers did move in. It isn’t clear
if the markets will respond well to the good economic news. Monday will be telling.
Market Internals are a decent trend-following analysis of
current market action, but should not be used for short-term trading except
perhaps to augment another system.
NTSM ANALYSIS
Sentiment is
negative. All other NTSM indicators are neutral. Overall,
NTSM is neutral. That is a broken record.
I remain about 20% invested in stocks as of 5 March (S&P 500 -1540). The NTSM system sold at 1575 on 16 April. (This is just another reminder that I should follow the NTSM analysis and not act emotionally – I am under-performing my own system by about 2%!) I have no problems leaving 20% or 30% invested. If the market is cut in half (worst case) I’d only lose 10%-15% of my investments. It also hedges the bet if I am wrong since I will have some invested if the market goes up. No system is perfect.
I still lean toward getting back in, after a pullback, to
speculate on a final ride to the top.
NTSM did give several buy signals over the weeks of 14 and 21 Oct, but
the market just looks too frothy to rush back in…we’ll see if the market will
pullback so I can join the insanity. If
not, cash is fine.
