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Monday, May 11, 2015

Daily update 5/11 Employment data

I guess there was a little buyers remorse today.

SPX fell .5% on very light volume.  In other words it did not take much in the way of selling pressure to send us lower.  There was no buying interest at the high whatsoever today.  The breadth ended at -62% which is a bit high for a pause type day.  This looked more like we are starting back down again. 

The futures are back below the 6 SMA, but still above the 18.  So far they have not got out of the Keltner channel at all on this rally attempt.  Even the DI lines did not get a positive cross.  This is the third cross above the red resistance line.  The other two times the rally was over when the futures closed below the 6 SMA.  Will it be different this time?  The bulls are being good little dip buyers, but rally chasers are missing in action. 

We are largely through the earnings season now.  Apparently the earnings were not good enough to propel the market higher.  What will it take?

Downside follow through tomorrow likely means we are headed back down.  If this thing is going to break out on the upside the bulls need to show up and be willing to chase price higher.

While the market cheered Friday's employment report there are some things I find disturbing.  Look at this chart of how the jobs were distributed through various age groups


The 55-69 age group increased by more jobs then the total increase in the report.  The most important group 25-54 actually lost jobs.  This age group has not been doing particularly well in this recovery to begin with.  This next chart shows just how bad it is.


All the jobs are going to older workers.  There is just no way this is good for the economy in the long run.  The 25-54 age group is key when it comes to growing the economy.  They are the ones that are in various stages of getting married, buying homes and raising families.  They are supposed to be the ones spending the bulk of the money that flows through the economy.  The problem is we are getting ever closer to the next recession.  The current expansion is already one of the longest in history.  Would another 2-3 years of expansion fix things for this age group?  I kind of doubt it and the odds of us getting another 2-3 years are probably pretty low.  The source of the problem is the lack of full time jobs being created in this recovery.  The older age group is likely to be much happier working part time then the 25-54 year old workers.  This report that was cheered by the market actually showed over 200,000 full time jobs lost last month.  Creating 200,000 part time jobs every month is not going to fix things.  The quality of the jobs really matters.  In this recovery quality jobs have been in short supply.  Many of them were in the energy industry which is now under severe stress.


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