As you know, from time to time I like to come off the numbers and look at the market from a top-down approach. The last time two times I’ve done this was the first week in October 2008 (I saw that movie before – it was in 1987). And the next time was in the Spring of 2009, discussing
what a bull market looks like.
Today will be only the third time I’ve done this in past two years.
And Friday’s stock market reaction to a deplorable job report (along with the resignation of the best economist in the Obama
administration) spoke very loudly as to what we can expect in the future.
On a larger picture, the “shrugging off” of the continuous bad news about the economy and especially the lack of job growth is very encouraging. Why?
Right now everyone knows jobs are not being created. The market knows it and today’s market prices reflect this.
Should the employment levels get worse (hopefully not), prices will likely drop to reflect this.
But now imagine any type of up-tick in the employment situation.
Imagine what stock prices will do.
And then imagine (try hard now) that this administration (or the next Congress) implements a Reagan-like job creation program that brings unemployment levels to under 9%, and then to under 8%, and then to under 7%. What will stock prices do (and no one is forecasting this which makes the upside even greater)?
Friday showed us how the stock market is responding to bad employment news. Now just imagine how it will respond if and when it sees any type of good employment news. It could be very impressive (in my mind it could be 1982 impressive).
Setting politics aside, the stock market likes to speak. Friday was one of the days it spoke loudly.
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