Monday, April 09, 2012

Just a day of "testing", no biggy, and little to do with the "Jobs" report

Although the media portrays the market decline as a reaction to the lackluster "Jobs" report and anxiety over Europe, nothing could be further from the truth. The decline is simply traders and short-term speculators "testing" the market. The Dow was hovering "within striking distance" of the psychological 13,000 level and the market manipulation crowd decided to make a go of it. The "Jobs" report sounded negative and the rule on Wall Street is to exploit any even remotely emotional connotations of any "news", regardless of the true underlying economic and business fundamentals.
The real question is not what happens today on the market, but what kind of follow-though occurs. Will this decline simply invite a "buy the dip" rally or have people had enough and is it close enough to May to "Sell in May and go away"?
And this still begs the question of where the economy will be headed in the months ahead. The stock market traditionally is a leading indicator for the economy, but the vast amounts of "hot money" in the ADHD-driven hands of hedge funds and prop traders has clearly "broken" the classic "stock market barometer."
It is certainly true that there are ongoing drags on the economy, but they have been there for quite some time without overwhelming underlying strength in business. It is worth noting that unemployment initial claims are still on a downwards trend, which is more indicative of a strengthening economy than a weakening economy.
The bottom line on the "Jobs" report is that it is well-within the statistical range of error for growing employment. And as the time-tested wisdom advises us, it is never wise to determine a trend or trend change based on a single data point. Apparently a lot of people think they are seeing a trend change when all they are looking at is statistical noise. The sensible people know better, but meanwhile traders will try to get away with whatever shenanigans they can since the media is too clueless to call them out.


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