• 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.

• 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.

• 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%.

• 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… 

• 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.

Mutual funds are low on cash.  More great information from Jason Goepfert at sentimentrader.com:

"In the most recently released statistics, the Investment Company Institute revealed that despite a flat market in June (according to the S&P 500), and a ratcheting higher of short-term interest rates, mutual funds decreased the amount of cash on hand once again. The Mutual Fund Cash Premium / Deficit that we post to the site has now dropped below -2% for the first time since the year 2000, meaning that we estimate that funds are holding about 2% less cash than they “should” be. Historically, a deficit of 2% or more has lead to a six-month return of -1.9% for the S&P 500, with 40% being positive. 12 months later, the average return dropped to -3.6% with 31% being positive (15 out of 48 months). That is remarkable compared to the average 12-month performance during the study period of +8.3% with 71% being positive."

Oil was up again, and the pullback in the dollar continued yesterday.  I read a stat that there are now more assets being put into funds that benefit by the dollar being down (such as the EAFE type funds).  Traders are again betting more on a falling dollar than a rising dollar.  From a contrarian point of view, that could mean the pullback is close to over and the dollar may start to rally again.  I had mentioned a couple of weeks ago that the dollar pullback could benefit anyone willing to jump into the I fund and it would have paid off.  Perhaps that strategy is close to having run its course.  In the other words the I fund may be back to a neutral to negative play. 

The new AAII Investor Sentiment Survey came out yesterday:

48% Bulls
26% Bears

I just emailed out the TSP Talk Sentiment Survey.  Are you on the list?  See below for more info.

That's all for today.  Currently 100% G fund.  Have a great weekend.