In recent days, the widely popular "News-Moves-Markets" notion has fallen faster than the role-model image of Olympic swimmer Michael Phelps (pictures of him "inhaling" pot were posted to the world, wide, web).
Here's the deal: Late last week, the news du jour was jobs; namely, the February 6 Labor Department report on unemployment. And, according to the financial in-crowd, the number was set to let the market DOWN, way down. See:
- "Job jitters may weigh on stocks." (AP)
- "One strategist expects the Dow to retest its November closing low if this week's government jobs report disappoints" and says: "It's like climbing up a hill of marbles." (The Australian)
- "Wall Street set for lower open on jobs data… It's not good. There's some selling in the markets on it. I think this is a precursor for tomorrow." (Reuters)
YET -- when the "Slow Motion Train Wreck" (Wall Street Journal) of the data was released on February 6, showing a "brutal" uptick in the unemployment rate (from 7.2% to 7.6%) -- the Dow Jones Industrial Average enjoyed a 200-plus point RALLY.
In the economic scheme of things, it doesn't get much worse than the biggest one-month job loss in 35 years. Still, the Dow soared. Put that in your fundamental "pipe" and smoke it.
(
8 compelling charts.
In-depth analysis.
Original commentary. The current
Short Term Update announces the start of a "whole new ballgame" in stocks.
Act Now.)
As for an interpretation of market movements that relies on clear and consistent "internal" data -- time/price cycles, momentum, sentiment extremes, and Elliott Wave structure -- the current Short Term Update is the one-stop shop.
In the February 6 Short Term Update, our analysts presented EIGHT eye-popping charts that revealed a striking commonality among ALL of the major financial indexes: Each one has treaded water above a long-standing shelf of support, with coincident breaks below those levels at the 2002 low.
To wit: the Dow Industrials above 8000 since 1997; the S&P 500 above 800 since 1997; the Nasdaq Composite above 1500 since 1996; the Dow Transports above 3000 since 1996; and the CRB Index of commodities above 200 since 1980.
For the S&P 500 in particular, the act of holding its head above the "psychologically significant" shelf goes back years, to 1937 to be exact. Here, Short Term Update draws on the following chart by former Merrill Lynch chief technician Bob Farrell:
Short Term Update adds the following insight: "As Farrell notes, 'History does not repeat itself exactly,' but its been doing better than a rough approximation of the 1937/1939 experience since last summer."
In the end, one truth remains: At each point when the indexes sunk below their respective "shelves of support," REFLATION had (in due time) jumped in to pull the markets back up ABOVE the water.