Market Notes

Employment for February is +295,000 and unemployment is down to 5.5%.  The US dollar rocketed upward and more importantly, so too did short-term interest rates (esp. in relation to long-term rates).  This put gold and gold stocks on their way to the big test parameters we noted in Wednesday morning’s update (we’ll update again in NFTRH 333).

Of even more note, the stock market has reacted negatively with momentum leaders Technology, Semiconductors, Small Caps and Biotech all dropping as well.  Amidst the over bullish sentiment we had been noting over the last couple of weeks, these ‘momo’ items had been compromising an actively bearish case.  Not today.

So ‘jobs’ is still strong despite recent declines in manufacturing and capital equipment / new orders data.  But those are leading edge things.  According to BLS, here is where the job gains came from in February…

Job gains occurred in food services and drinking places, professional and business services, construction, health care, and in transportation and warehousing.

Services, services, services… as we have been noting would likely be the case.  These are back end parts of the economy and being very large parts of the economy, they are not to be taken lightly.  But still, the services segments follow, not lead.

Back to the stock market, after a big pop on Monday, the balance of the week has been down.  Considering the dangerous sentiment levels a “high risk” market had come to this portends further weakness barring a miracle turnaround today.

I have done exactly what I had said I’d do and wildly increased already high cash levels and am content to hold on to most of my gains until the market stabilizes or finds a bottom. *

As for the gold sector, it followed through to the downside on the warning signals we reviewed Wednesday in pre-market.  With the stock market weakening, we may be looking at an opportunity at the “must hold” levels we have noted.  Again, we’ll cover that in #333.

There was not much doubt about the short-term bearish turn precious metals had taken, but today seems to be removing some of the doubt about the broad stock market as well.  Let’s see how things close out.

See you Sunday with NFTRH 333.

* An NFTRH+ update about shorting the SPY was posted yesterday and emailed to opted in subscribers.  I did not get to it until late in the day and considering that my conviction was not overly strong I decided to wait until the market closed to email it.  I am sorry about that, but at all times I take subscribers’ well being into consideration and I felt it would have been inappropriate to put something like that out minutes before the close, with little time for consideration.  For all I knew, the market could have launched upward on the coming ‘jobs’ report.