BigTrends

I reviewed quite a few different economic and valuation charts today, looking for correlations with market performance and big picture trends.  The following chart was striking to me, source here.



You can see that the Weekly Initial Jobless Claims (seasonally adjusted) showed a clear strong uptrend through the late-February/early-March area.  At this point they have trended fairly consistently lower.

This correlates very strongly with the market bottoming on March 9th and its strong upward trend in that time.

When does this report come out?  Normally it is every Thursday at 8:30 am Eastern Time.  It is released by the U.S. Dept of Labor and is available here.

Keep an eye peeled for the unveiling trends in this weekly report.  Currently, it looks like the rate of decline may be slowing as we approach the 500k area, which may mean the market uptrend will pause/reverse.

The much anticipated jobs data was released Friday and pre-market action is pointing to a decisive sell-off.  Of course, this is based on initial reaction to the number of jobs lost, but you can read the direct release below and make your own assertions. 

You don't normally see economic data and technical data used in tandem, generally, economic indicators are longer-term compared to short-term analysis with technical indicators.  In my view, this morning's negative reaction comes at a good time for buyers.

Most traders will look to short this market next week, based mainly on Thursday's sell-off followed by this morning's negative reaction.  That seems logical, but there are two indicators that are screaming SHORT-TERM BOTTOM.  The VIX and the CBOE Equity Put/Call Ratio.

CBOE VIX


CBOE Equity Put/Call Ratio


empsit

Following expiration, this next week is filled with landmines, regardless of your bullish/bearish bias.  The Fed has a meeting this week and will arguably be discussing the economy, green shoots and the potential inflation on the horizon.  There are a smattering of earnings reports too, and let's not forget we are entering the 'confessional period', where companies who may miss their earnings step up and make it known.  I doubt there will be much action there as earnings estimates were taken way down.  On the economic front, durable goods will be watched closely along with income/spending figures.  Home sales are early in the week, looking for another robust sign of a bottom, while sentiment is out later in the week.

We mentioned late last week that the late buying surge was a clue into the next move, which would be higher.  Monday certainly showed us that much!  The breadth was tremendous, nearly 5-1 to the positive but turnover could have been better.  What's striking is the collapse of the greenback, which is not getting any support whatsoever.  Bond yields have been rising to elevated levels, too.  Meanwhile the rest of the week is all about jobs....the ADP report Wed, jobless claims Thurs and then the big employment report Fri.  Perhaps the market has baked in the numbers, but we don't think there will be a big move higher on the report.