The Week Ahead: What Are Those Bear Market Forecaster’s Missing?

The widely anticipated monthly jobs report on Friday shocked forecasters as for the second month in a row they were way off the mark. In the June report May’s numbers were revised even lower to just 11,000 new jobs.

The 285,000 reading for Non-Farm Payrolls was above even the most optimistic CNBC forecast and the increase of 38,000 jobs in professional and business services was especially encouraging. Even manufacturing had a gain of 14,000. Still it is not surprising that some who have been warning about the deterioration in the economy were still not impressed.

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The Non-Farm Payrolls chart suggests the trend may have changed with the June report but one should remember that this data series, like many of the economic reports, is subject to wide swings on a month-to-month basis. Many economists are more concerned by the fact that S&P 500 came within a fraction of the all time high and yields on the 10 Year T-Note dropped to new all time lows.

Technical indicators like volume, price as well as the number of stocks advancing or declining are rarely revised and this is one of the many reasons I favor technical over fundamental analysis. As I pointed out last week the fact that the A/D lines on the major averages did not make new lows during the post Brexit market decline was a sign of strength.

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Friday’s gains were impressive as the major averages were up 1.5% or more and even more important there were 2711 stocks advancing and just 370 declining. The strength of rally was likely fueled in part by short covering as even after the close one long time market bear called the market’s reaction “comical”. So what are these bear market forecasters missing?

http://www.forbes.com/sites/tomaspray/2016/07/09/the-week-ahead-what-are-those-bear-market-forecasters-missing/