Market Lab Report - Premarket Pulse 8/5/16
Major averages were flat to slightly higher yesterday on lower volume as the markets held tight ahead of this morning's Bureau of Labor Statistics' monthly jobs report.
Last month, the unemployment report was weak. This month it topped expectations. July non-farm payrolls came in at 255,000, well above the 185,000 estimate. Most of the growth, however, came in the form of services jobs while there was no change in the number of long-term unemployed. The unemployment rate, which does not count the long-term unemployed, came in at 4.9% and average hourly earnings increased 0.3%.
Futures are rallying on the news. Nevertheless, the jobs report is becoming increasingly less significant as the main factor driving this market. Quantitative easing pushes US stocks and bonds higher while economic and political shocks act as temporary setbacks. The end to all of this is not going to be pretty but central banks can continue to print, pushing US markets higher, a lot longer than most would expect.
Legendary investor Jim Rogers recently wrote: "I’m very worried because what we’re facing now can get worse than anything most of us have seen in our lifetimes. The world may be overdue for a crisis of that magnitude. Throughout history, we've had periods of severe crisis. I don't mean 1968 or 2008, for instance. I mean a serious crisis with widespread bankruptcies, massive unemployment, the emergence of dictators, and war. We've had two 50% market drops in the last 15 years. Why can't we have a third? And if it can drop 50%, why can't it drop 75%? It can and it will ultimately. But in the meantime, all that money printing could still drive stocks higher. And central banks might take even more desperate measures to keep the game going."
Rogers also mentions that Marshall law in the US is not out of the question, echoing what former Fed Chair Alan Greenspan said in an interview he gave earlier this year: "The government just makes it worse because it doesn't know what it’s doing. What we’re seeing in Venezuela has happened in many countries throughout history. It's happened to many countries in the last century -- this isn’t something that happened 500 years ago. It hasn’t happened in the U.S. yet, of course. But don’t think it can’t if the circumstances are right."
But in the meantime, we remain vigilant in keeping a close eye on potential profits in stocks and in ETFs via the VIX Volatility Model and Market Direction Model.
Online digital picture provider Shutterstock (SSTK) had a pocket pivot in strong earnings. It traded down much of the day but finished higher in the
top two-thirds of its trading range.
RV component maker Drew Industries (DW) had a pocket pivot breakout on strong earnings. Earnings are skyrocketing, sales are accelerating, institutional sponsorship has grown over the last 6 quarters, group rank 5.
Telecom infrastructure company Dycom (DY) had a pocket pivot off its 50-day
moving average. Earnings are soaring, sales are accelerating, group rank 35.
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