Today’s price-action in the market looks to be just about right – a little pull back after strong gains. It appears the market has settled down. Tried as it did, the breathless media was unable to convince the market that Friday’s employment report was a sign that the US economy has reversed direction.
- The December-January total was the weakest two-month gain in three years
The fact is that aside from the headline number, the employment report actually produced some good news. Inside the report, buried within the jumble of data, some rather boring statistics told a different story about the state of US employment and it appears the bulls in the market actually burrowed into the data to “see what they could see.”
- The November nonfarm payrolls total, which was already gangbusters, was revised higher again, this time by 33,000 to 274,000.
- The labor participation rate, which has become a widely followed statistic these days, moved higher to 63.0 percent from 62.8 percent. Last month’s 62.8 percent participation rate was the lowest since 1978.
- Household employment soared by 616,000.
- The number of unemployed fell by 117,000.
- The broad measure of the unemployment rate fell to 12.7 percent from 13.1 percent, which is the lowest level since November 2008.
- The goods-producing sector added 76,000 jobs, the most since January 2006.
- Construction jobs increased by 48,000, the biggest gain since March 2007.
Even if a slightly mixed bag, the above data seems to have effectively put the brakes on the drummed up fear about the emerging market collapsing and the global economy falling apart.
In any case, the market still has more settling down to do. The sell-off last week has created some nervousness, and rightly so. That will need some time to dissipate. In the meantime, keep your eye out for the inevitable up trend. Once we are there for sure, find the bargains and take advantage.
Check out the alternative energy industry. It appears it was especially hard hit during the panic. I have some fuel-cell stocks I track and they were really hard hit. They now seem to be coming back, as do a number of other medium- and small-cap stocks I watch.
I am not sure what the following information means, but somehow it strikes me as positive, a good sign, a positive omen, a harbinger of things to come.
- The average balance in 401(k)s, the retirement savings plans provided by some companies, for people in their 50s and 60s reached a record $168,384 last year, surpassing the pre-recession high in 2007 by 42 percent, according to Deutsche Bank calculations.
Perhaps the above simply references the huge gains in the market over the last five years, but, then again, it would also have to account for the huge losses suffered five years ago. The fact is that the 401(k)s for retirement are at a record high and not by some small measure. Forty-two percent is a huge number. Another fact is that the dollars in 401(k)s come from only two sources – employers and employees. Both, then, are pouring money into a program that is heavily invested in the stock market.
This is good, right?
Trade in the day; Invest in your life …
