Here we go again. Another important jobs report. I don't know exactly how important it really is to the future economy of the country but it could be a very important factor in breaking the recent market trading range, either upward or downward.
Some jobs reports seem to come at more critical times than others. Today's is one of those times and that is when I normally post the following information. I posted it last month also. Make of it what you will...
During the past three years:
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Three days after a large surprise in the jobs report of 50,000 jobs, up or down, the S&P 500 was higher only 5 out of 18 times. Its average return was minus 0.5%. Markets don’t like surprises because they create uncertainty.
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Ten days after a negative surprise of 50K jobs or more, the S&P was higher 55% of the time. Ten days after a positive surprise of 50K or more, it was lower 58% of the time.
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Ninety days after a large negative surprise, the S&P showed an average return of +5.1%. Ninety days after a large positive surprise, its average return was 1.7%.
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The correlation between surprises in the jobs number and 90-day returns in the S&P 500 has been -.32. This means that the more positive the surprise, the more negative the performance in the S&P and vice-versa. Given the sample size, this is significant.
And, perhaps most important of all…
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If the market did cartwheels for the jobs report and closed higher by 0.5% or more, there was only a 33% chance that is was still higher 30 days later. If it fell out of bed and declined by 0.5% or more, there was a 93% chance of it being higher after 30 days.
The estimates are for 225,000 new jobs. Any more speculating on my part would be irresponsible because I have no idea what will actually happen. The market does seem to be hanging tough but if you look again at the chart I posted yesterday (see below) that showed attempted breakouts failing under similar chart patterns, we have reason not to get aggressive. Anything can happen. I'd hate to miss a rally but chasing may not be the correct thing to do so I will stay where I am for now. If the market rallies. If we see a big drop, it may be tempting to get in stocks some - ("If it fell out of bed and declined by 0.5% or more, there was a 93% chance of it being higher after 30 days.")
One more quick stat, the AAII Investor Sentiment
Survey came in with 40% bulls and 27% bears (33% neutral). 1.0 or
less is bullish and 2.0 or higher is bearish. That 1.5 to 1 ratio
is about as neutral as that indicator gets. That's about where we
are seeing many of the indicators, right in the middle.
That's all for today. Currently 100% G fund. Have a good
weekend.
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