General markets were up yesterday on lower volume as most leading stocks which were hit hard on Wednesday staged feeble bounces, at best. Even while markets were up yesterday, overall the action has been weak as of late. The divergence on Monday between the weaker small-cap Russell 2000 and Dow Jones Transportation indexes and the stronger S&P 500 and NASDAQ Composite Index has been telling. Divergences are generally bearish for the general markets, and this morning European markets and U.S. futures were down big prior to the 5:30 a.m. PST jobs number being released, allegedly based on "jitters" regarding jobs growth in the U.S. This strikes us as a bit odd, but the final announcement of 88,000 jobs, far below estimates, appears to justify the "jitters" and points out how weak the U.S. economy is despite the pundits claims that we are in a "recovery." Given the statistical shenanigans used to generate the BLS jobs number, it is likely that in fact jobs were lost in March.
Precious Metals ETFs the SPDR Gold Shares (GLD) and the iShares Silver Trust (SLV) headed lower once again today. If stocks come under further pressure, precious metals may sell off as well though perhaps less as countries are buying up gold and selling dollars. Meanwhile, the Fed attempts to prop the dollar while quantitative easing props the stock market in subtle ways. So we have the Fed keeping a floor on the dollar, the world economies keeping a floor on gold, and QE keeping a floor on the stock market. This makes for many cross currents which are at cross purposes to each other, and explains the weakly upward sloping action of the NASDAQ Composite so far this year, a difficult trend to play, particularly on an individual stock basis. As well, the breakdown in the precious metals may have ominous implications of an impending liquidity and/or deflationary crisis.
If one's stops have not already been hit, investors should be keeping their finger on the trigger as a move to cash is the least one might consider currently given that the Market Direction Model went to a neutral/cash signal on Wednesday.