Weak Jobs Report

On Friday, we saw the same twisted logic that the market has been using for months now.  As long as the Fed is perceived to be slowing their incessant interest rate increases, then buyers are safe in the market.  Meanwhile, this week will show another baby move in the interest rate march when the Fed meets once again.  

Getting back to the market, the jobs report on Friday was considerably weaker than expected which fits in nicely with the logic we just discussed.  April job numbers were weaker than expected and February and March numbers were revised lower.  The market celebrated, just as we expected, on Friday morning after that news.  Even the bond market was inspired to move up for a change.  But, while the early morning was the high for some of the indexes we follow, the Dow and others made new highs for the move later in the day.  The Dow looks like it wants to move to a new all time high now that it is nearly there.  As you all know that would represent a pretty large nonconfirmation across the other indexes.  But, that doesn’t seem to hold the market back.

We continue to see the housing market turn over and down.  Last week, Toll Brothers (TOL), a leading luxury homebuilder reported that orders declined 32% in its second quarter after reporting in first quarter that its orders were off 29%.  The company said that it would probably be delivering several less homes than originally thought.  The Chief Executive said that they are entering their ninth month of slower sales in most of their markets.  Housing is getting some front page news, except this story appears on page A2 of the WSJ.

The money just keeps flowing to keep the market from going down.  Friday’s move was fairly strong on the surface and gives those paying attention only to the Dow a sense that the market is “going up”.  We figure that when it’s that obvious, it can’t last too long but we seem to be getting nickel and dimed to death as we see no downward pressure on stocks.  Meanwhile, the dollar is sinking daily due to the prospect that interest rates may not be moving up any longer.  With that in mind, we watch the Euro region and the Asian’s (especially China) rumbling about higher interest rates.  The Fed is in a great deal of trouble.

We continue to say, “Sell in May and Go Away” and if you don’t Be careful out there…

Dow Industrials:  11,577.74  +138.88
RYVNX:   18.19
RYAIX:  21.81
TLT:  83.60
BEGBX:  13.46