Jobs, Jobs, Jobs!!! It ALL comes down to Jobs!!

Note: Comment on today's market rally addressed at end of this posting.

Came across this article last night, but was too tired to post it then. But IMO, it truly reflects how much this administration SCREWS the small businessman in favor of the Big Corporations who provide them all those campaign contributions and campaign money. Monopolists trying to undermine the capitalist heart of our economy.

Why unemployment is so high.

Of course, let's also recall that for the Democrats in charge of this administration and congress, the quickest way to create jobs is to put people on welfare, not back to work.

Pelosi: Welfare creates Jobs.

So we have the Initial Jobs Claims report tomorrow and that should be indicative as to whether this rally can hold or not.

Current Market Situation

Whew!! That was quite a rally we had today!! Very strong price moves, but did the volume truly reflect the price move? Not particularly. If we look at the SPY (a proxy for the S&P 500 which provides me with volume related data), we can see that volume over the past two days, while positive (black columns), was PATHETIC in relation to previous selling peaks (brown columns):

SPY Daily chart

And this evening I watched the nightly market analysis at Perfect Stock Alerts to hear Christian's. He strikes me as a savvy market technician who backs up his views with easy to understand explanations. It never hurts to confirm/challenge your own beliefs with the views of others.

Perfect Stock Alerts analysis: Read The Market Chart, Don't Chase It

NOW.. CNBS is spamming their website and network with "noted short seller" Doug Kass's declaration that the market low is in. I have to admit that I must not watch enough CNBS because I don't recall this guy's name, or the assertion that he called the previous low in March, 2009. But whatever.. He's one voice in the wilderness and the TECHNICALS DON'T LIE!! They may "fib", but they don't lie.. ;0) And neither does volume (or Relative Strength Indicators, RSI)

Of course, maybe all this volume is taking place "off-market" in the "dark pools" of capital (Hellow FINREG?!), but to capture the attention of the retail and independent market traders, you have to "show your hand" eventually and reveal that the market is under heavy accumulation.

Doug Kass goes bullish

Doug Kass, most views

Kass, interview with Jon Najarian

Could Mr. Kass be right again? It's still hard to say.. Give us a few more rally days like today and eventually we're going to get that Buy Volume spike as shorts throw in the towel and are forced to cover, adding fuel to the buying fire. But we'll need to get above 200 Day MA before I see that happening. And it's my belief that to nullify the H&S formation, we need to see 1250 on the SPX seen within a few months.

But just because Mr. Kass is calling for a bottom in the market, he's also only suggesting a 10-12% increase by YEAR END. 10% on the SPX from the 1010 bottom is only 1110 and we're half-way there based upon today's trading ALONE.

Furthermore, 10% return on the SPX still leaves it BELOW the 200 Week MA

Doesn't strike me as much of a bottom.. Nor much of a bull market rally. After all, we saw nearly 83% upside after Mr. Kass's LAST market bottom call. Now he's only settling for 10-12%... Hmmmm...

HOWEVER, let's look at something interesting.. The SPY Monthly chart IS DIFFERENT than the underlying SPX for which it's supposed to be a proxy. It's something that I hadn't looked at closely, relying upon the raw index data. But I'm finding some interesting divergences when looking at SPY data:

SPY Monthly Chart

Notice the hammer that was put in on the SPY? It's not yet evident on the SPX monthly chart (it's "all data" so you might want to decrease it to 5 years):

SPX Monthly

THAT IS INTERESTING. Because a Market Technician, looking for reversal points, looks for "Hammers", (Google "Candlesticks Hammer" for a description). And a Hammer on a Monthly chart is not to be ignored as something temporary. Of course, it requires confirmation from the following month's Candlestick indicator.

What's so interesting is why there is a hammer on the SPY, but not on the SPX? Which one should be trusted as the best reflection of the market technicals?

ALSO, something that other technicians are not paying attention to is that the Monthly Stochastics are fast approaching previous oversold conditions. Now that doesn't mean that oversold monthly stochastic can't exceed the previous iterations, but it's unlikely.

In sum.. this is going to be a trader's market.. swings in one direction or another and no major gains to be had by holding it. And that's what Mr. Kass is offering as his best case scenario that leads him to assert "This business is going to be fun again and it's going to happen sooner than most people think".

If 10% returns is "fun", I'd sure hate to know what he asserts is "boring".. ;0)

In sum.. be nimble.. watch the volume.. and look for inverted hammers on the charts for reversal points back to the downside.

And remember there's always the potential scenario where we see the mother of all short squeezes that takes us up to 1250 on the SPX.

Scrutinizer