Hi. Peter Navarro here with this week’s stock market wrap for the week ending December 8, 2023. The market remains a gambler’s roulette wheel rather than an intelligent speculator’s poker game.
Bulls on the long side continue to bet on a soft landing propelled by a series of rate cuts by the Fed come the new year. They remain heartened by the continued, albeit slowing, move up of the markets – the S&P eked out a small gain for the week.
Bears on the short side, like me I might add, see all manner of hazards that must inevitably, and sooner rather than later, catch up with Wall Street – persistently high inflation, equally persistent high interest rates that are slowly choking off interest rate sensitive sectors like autos and housing, a looming fiscal cliff, geopolitical hazards ranging from the Red Sea and Persian Gulf to the Straits of Taiwan, and so it goes.
Technicians can see indicators that support either side of the bull-bear equation. Consider this excerpt from the most excellent technical analysis website Market Edge for the exchange traded fund for the S&P 500, SPY. Making the bullish technical case:
The long term moving average convergence divergence indicator, an intermediate-term trend indicator, is bullish at this time. Upside momentum, as measured by the 9-day Relative Strength Indicator is positive but is beginning to slow.
Over the last 50 trading sessions, there has been more volume on up days than on down days, indicating that SPY is under accumulation, which is a bullish condition. The stock is trading above a rising 50-day moving average. This validates the strong technical condition for SPY.
The stock is above its 200-day moving average which is pointed up indicating that the intermediate term trend is bullish.
Fair enough. Yet there are a few indicators that signal bearish conditions in the same mix – the short-term MACD, the negative on balance volume, and the money flow slope. Remember here that technical analysis does a good job identifying trends in the meat of stock market move, but it does a piss poor job catching abrupt trend changes like a crash.
So what did we learn about the bull/bear battle this week? The all-important jobs report came out on Friday. The top line numbers of 199,000 new jobs and a 3.7 percent unemployment rate holding steady create the impression of an economy holding up well. Yet, beneath that surface, we see that the numbers were inflated by the return of 50,000 striking Hollywood and UAW members – and some analysts acknowledged a slowing labor market.
To this point, most of the new jobs created were focused on the healthcare and government sectors while many other major industries did little or no hiring. It should also be noted that the retail sector took an astonishing 38 percent fall in jobs, a 40,000 job drop offset by positive numbers in most of the other sectors but a bad omen for the holiday shopping season.
The brightest spot in the jobs report was a 0.4 percent increase in average hourly earnings, which is the biggest gain in four months. While blue-collar America celebrated, such news did not please the Federal Reserve.
Just think about this: The Federal Reserve’s entire strategy to bring inflation under control is to crush the growth in wages – the Fed is on record that wage growth must decelerate the 3 percent before it rules out further increases in interest rates. Not exactly MAGA-friendly.
Okay. That’s it for the week. Cash, at least in my household, remains king. Be sure and catch this weekend’s Substack and podcast where I get to the very bottom of the rot in the Leftist media. Spoiler alert: the Washington Post may have something to do with that.
And please share this with a friend and visit the substack at www.peternavarro.substack.com
A Gambler’s Casino Rather Than a Speculator’s Market