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Pastimes : The Philosophical Porch
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From: Rarebird11/4/2005 9:39:24 AM
   of 26251
 
The October Nonfarm payrolls came in at 56,000 (previous month was revised up 30,000), with a .5% average hourly earnings increase. The unemployment rate came in at 5%.

All of this means very little. In bull mode, bad news is ignored and looked at positively. For instance, the average hourly earnings increase is viewed as good since it allows consumers to spend more and helps pay for their higher energy costs. In bear mode, the high average hourly earnings increase will be taken negatively; that is to say, an average hourly earnings increase of .5% hurts corporate profits and may represent a harbinger of stagflation.

What matters here is how the market reacts to the news. The news itself is basically irrelevant and can be used to justify a bearish or bullish stance.

Given the strong run up in stock prices this week, I will take the reaction to this news as extremely bullish if these markets close up today with strong breadth.

If the market closes flat to slightly down with decent breadth, it is still mildly bullish, given the propensity for traders to take profits ahead of the weekend.

If the market closes down modestly (.5%), then reaction to the news was neutral.

Anything close to or exceeding a 1% drop in the indices would be a bearish reaction to this news.

I remain long and in these markets.
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