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Thursday, March 10, 2016

Daily update 3/10 Retail employment oddity

Well that was interesting.

Draghi supposedly over delivered with the ECB announcement.  Markets were flying high early on.  Then during the press conference he said they did not anticipate any more moves to lower rates.  That sparked a surge in the Euro and a sell off in stocks both in Europe and the U.S.  In the afternoon the U.S. market recovered considerably from the lows.  Breadth was -55%.  New highs dropped down to 76.  They just can't seem to get over 100.  New lows picked up a bit to 14.  Still low. 

The futures closed just above the 20 SMA.  They made another trip up to the top of the resistance zone, but were sent packing.  The bulls bought the dip, but that has not been the problem.  The question is whether they will chase price higher or not.  That is unknowable at this juncture.

The green count slipped some more today.  It would not take much to get a negative cross now.   The bulls need to show up and bust through resistance or risk a roll over in the market.

The bulls still have a tentative grip on the market.  There was a good rally around the world for the last couple of weeks in hopes of more stimulus.  The negative reaction in Europe may just be a sell the news event.  It is possible the bulls show up tomorrow.  However, if they don't this rally is in jeopardy.

The COMPX short term trend went neutral today.  That is probably not a good sign for the bulls.

This is an interesting read.  3 Things: Fed Problem, Oil – Ain’t 2009, NFIB Un-Optimism   I have shown plenty of data about the lack of retail sales and the build up of inventory, but this chart also shows a build up of employees.  

Starting April 2015, overall retail sales (again, including auto sales) fell below 3% on a 6-month average basis (meaning more than a one-month drop in growth rate) – and have remained closer to 2% than even 3%. In past cycles, that has meant initiation of contraction in retail trade employment and widespread recession. Not this time, however, as the BLS gives us a remarkable +313k gain (including February 2016) over the last 11 months. That equates to an astounding 28.5k per month.”

In the past retail employment started dropping immediately when retail sales fell below 3%.   That is not the case this time.  The retail industry is ordering more stuff and hiring more employees while sales really suck.  This strikes me as odd.  What is different this time?  It looks like are overly optimistic for some reason.  If sales don't pick up sooner or later there will be order cuts and layoffs.


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