Nothing like hind sight trading to keep you humble. Yesterday it looked like the market might run down in anticipation of the Unemployment report today. Yesterday’s low missed a perfect 62% retracement of the 1,134 point rally from the August lows. I have to admit I thought we were going to take out that retracement yesterday and then test that 7-month old T-line. So much for having the big idea. In the end, my analysis from two days ago was the correct one. Another dip to buy. 16711 was a key 50% retracement. 16578 would have been the next target. Yesterday’s low came within 10 ticks of that low. Despite the rally back, however, I am turning more bearish now, which I really have not been for the last 3 years. If the Dow can’t challenge 17,100 in the next month, that signals a change in trend. When I took Econ in both high school and then as an undergrad at Colgate University during the Mid-80’s; we were taught to consider 6% unemployment “full” employment. Does anyone out there feel like we have a rosy employment figure? We have the lowest participation percentage in the work force since 1978. 232K new jobs created while 315K left the work force. Are those leaving boomers retiring? Or is some broader trend here. That’s a net loss of 83K folks working, due to those who “left the work force”. Interesting times. If the money flow stops pouring into the stock indexes, I can’t see what’s going to hold this market afloat over the next 3 to 6 months. CER
