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Wednesday, April 8, 2015

Daily update 4/8 Unsettling employment data

Did biotech save the day?  IBB was strong out of the gate amid sector merger news.  I believe that kept the sellers from coming out.

SPX certainly looks coiled up for a big move.  Except for some very brief volatility after the FED meeting minutes were released it was an inside day.  Breadth was +58% and new highs were 127.  Once again nothing to write home about.  A pause day while we await earnings announcements.  AA went first today after the close.  After an initial pop on an earnings beat the revenue miss took over and AA tumbled.  It is down over 3% as I write this.  It is not going to be good for companies that miss lowered revenue expectations.  I wonder how many there are going to be.

The 10:00 bar closed above the 100 SMA, but failed to stay there as sellers showed up.  At the 4 PM close the futures were slightly below the 100, but they are above it now in after hours.  There was still a lack of buyers above the 100.  However, sellers have not taken over yet.  I think the strength in IBB held them off today, but that is just a guess.  Resistance has held for three days now.  How long can it hold without the market being rejected?  I suspect tomorrow will determine whether we break out on the upside or head down again.

This is a very informative article on our current situation.  Mish's "Core Unemployment" Thesis vs. Bernanke's "Natural Unemployment" Thesis  The analysis is on the prime 25-54 age group.  This eliminates the excuse of retirement affecting the stats.  This is one of several interesting charts in the article.

For age group 25-54, there were 1,791,000 more people employed in March of 2000 than in March of 2015 even though the population of that age group increased by 4,712,000!

This is remarkable given age that group 25-54 factors out retirement and allows for six years of education. On a population-adjusted basis, age group 25-54 has a staggering 6,503,000 employment shortage compared to the year 2000. This does not even factor in part time employment.

This does not surprise me at all.  When I look around at family and friends and their kids it is very obvious things are not like they were.  I am worried that some (possibly even most) of this is jobs being automated away by computers.  Time will tell how that plays out.


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