Shocking Jobs Report

Please click here for an enlarged chart of SPDR S&P 500 ETF Trust (NYSE:SPY) which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

  • The chart shows there is selling in the stock market in the early trade.
  • The chart shows zone 1 (support).
  • RSI on the chart shows the stock market can go either way, driven by Iran news and economic data.
  • The jobs report is known as the mother of all reports due to its importance.  The jobs report is a shocker.  No one was expecting a negative number.  Here are the details:
    • Non-farm payrolls came at -92K vs. 60K consensus.
    • Non-farm private payrolls came at -86K vs. 78K consensus.
    • Unemployment rate came at 4.4% vs. 4.3% consensus.
    • Average work week came at 34.3 vs. 34.3 consensus.
    • Average hourly earnings came at 0.4% vs. 0.3% consensus.
  • Prudent investors need to be careful as fear of recession pokes its ugly head.  When taking a 360 degree view using the following data, recession fear is justified:
    • Job losses
    • Rising unemployment
    • Spiking oil prices
    • Disruption in global supply chain
  • Prudent investors should also pay attention to history.  Historically, some recessions have been triggered by oil shock and/or the Fed's response.
  • Momo gurus are already out claiming that the government manipulates the data and is using this argument to persuade the momo crowd to continue to buy stocks.  Prudent investors should ignore momo gurus as their real job is to run up the stock market and their own positions under the disguise of analysis.  Instead, investors should rely on hard data and objective analysis.  Think about it: Why would President Trump or any politician manipulate jobs data to show losses if there were none?  As a matter of fact, politicians in power have an incentive to manipulate the data to show job gains ahead of the midterm elections.  
  • Conspiracy theories regarding government data are widespread.  In our analysis, as much as it may not be a popular view, the government data is often flawed but not manipulated.  It is often flawed due to the methodology, not due to intentional manipulation.
  • Yesterday, when oil was hitting new highs for this cycle, the U.S. government appeared to have floated the idea of the U.S. government selling oil futures.  The U.S. government has the financial horsepower to depress oil and gas prices in the U.S. simply by selling futures.  Immediately after the leak, oil prices fell, but the downturn was not sustained.  Oil has gone on to make higher highs.
  • President Trump has already said that the U.S. navy could escort ships through the Strait of Hormuz, and the U.S. could insure ships.  None of this has had the intended effect of lowering oil prices.  We wrote on March 4:
  • When President Trump said that the U.S. Navy could escort ships and President Trump ordered the United States Development Finance Corporation (DFC) to offer reasonably priced insurance to ships traveling through the Gulf, the momo crowd aggressively bought stocks.  There was no smart money buying.
  • As usual, the momo crowd is oblivious, but prudent investors should pay attention to flies in the ointment:
    • It is not clear if DFC has the authority to provide insurance to all ships.
    • Providing insurance to ships in a war zone is extremely expensive.  It is not clear if DFC has the resources to provide such insurance.
  • The U.S. can also release oil from the Strategic Petroleum Reserve (SPR).
  • It is very important to President Trump that gas prices do not go up before the midterm elections.  President Trump is the most powerful person in the world and has many tools at his disposal.  So why are oil prices still going up?  We have shared with you from the very beginning that the war might not be short lived, as Wall Street had believed.  
  • Even though stocks are down, they have mostly held up.  The reason is that the momo gurus continue to tell the momo crowd the Iran war will be short lived, and the momo crowd continues to believe and aggressively buy every tiny dip.
  • Investors should start with our Second Law of Investing and Trading, which states, “Nobody knows with certainty what is going to happen next in the markets," and follow with the Third Law, which states, "Making investing and trading decisions based on probabilities is the only realistic and profitable approach."
  • Prudent investors closely watch retail sales data as the U.S. economy is 70% consumer based.  Retail sales are beginning to reflect distress among the working class.  Here is the latest retail sales data:
    • January headline retail sales came at -0.2% vs. -0.1% consensus.
    • January retail sales ex-auto came at 0.0% vs. 0.2% consensus.

Magnificent Seven Money Flows

Most portfolios are now heavily concentrated in the Mag 7 stocks.  For this reason, it is important to pay attention to early money flows in the Mag 7 stocks on a daily basis.

In the early trade, money flows are negative in Apple Inc (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc Class C (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), NVIDIA Corp (NASDAQ:NVDA), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are negative in S&P 500 ETF (SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Momo Crowd And Smart Money In Stocks

Investors can gain an edge by knowing money flows in SPY and QQQ.  Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil.  The most popular ETF for gold is SPDR Gold Trust (NYSE:GLD).  The most popular ETF for silver is iShares Silver Trust (NYSE:SLV).  The most popular ETF for oil is United States Oil ETF (NYSE:USO).

Gold

The momo crowd is like a yoyo in gold in the early trade, and this is reflected in gold ETF (GLD), silver ETF (SLV), VanEck Gold Miners ETF (NYSE:GDX), and Global X Silver Miners ETF (NYSE:SIL).  Smart money is inactive in the early trade.

Bitcoin

Bitcoin (CRYPTO: BTC) is seeing selling.

What To Do Now

Consider continuing to hold good, very long term, existing positions and add tactical positions based on signals. 

The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.