Saturday, June 4, 2011

Comments and outlook for 06-06-2011

Who would have guessed that the employment #s would have had the impact they did Friday?  ADP told us and the NFIB (National Federation of Independent Business) confirmed that employment #s were going to be horrible.  So it is not like the #s were a big surprise.  So the negative market action confirms I believe that the longer cycles are now dominating market action.

Actually I thing the #s are understating the employment problem.  Think about this: 10,000 boomers a day are hitting retirement age.  Now I have seen no hard numbers, but among my circle it seems more and more people in the 62-66 age group are retiring at accelerating rates.  Some because they can't find work.  Some for health reasons.  And then some like me who just got tired of the corporate rat race (of course I did that at 55  and have not regretted it for a minute hehehe).  So this is 300,000 boomers a month (or 3.6 million a year) leaving the labor force.  Let's say half of these retire within a year of being elgible or about 150,000 a month.  You would think this alone would reduce the unemployment problem, yet the problem seems as bad as ever.  Why is this not being reflected in employment (unemployment) #s?

But I digress.  Monday the 11.2TD cycle and 5.6TD cycle are up.  The 22TD cycle is down.  The 2.6TD cycle is down.  So overall these 4 shorter cycles offset (to a large extent).  So the market action Monday is dependent on the longer cycles and the 20 week and 1 year cycles are down.  And I believe the 1 year cycle is hard down. 

Based on this alignment of cycles It would seem we should test and probably break below the 1294 FIB support level.  Could we test the 1279 FIB support level?  Maybe, but probably not Monday.

Here is a visual:

GL traders.  Extreme care is in order.

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