Jobs Report Has Something For Both Bulls And Bears To Like

The August nonfarm payrolls report showed another drop in the number of jobs lost, as payrolls fell -216,ooo vs. expectations for -230k. This shows that the pace of job losses continues to slow, although we are still a ways away from seeing positive job growth.

As the chart above shows, the job losses associated with this recession has been much worse than the average recession. The job losses this time around have been both deeper than average, and have lasted longer. I think the silver lining here is that the above picture is showing what has already happened, and as the economy stabilizes a bounceback in job growth could help foster a stronger recovery than most expect.

The bears will hang their hats on the fact that the unemployment rate ticked higher to 9.7%, reaching its highest level since 1983. I think the bears felt that after two days of a low volume bounce in the stock market, today would be the day they could press their shorts and the market would decline again.

It's still early, so anything can happen, but the market seems to be hanging in there. I am particularly pleased with the action in the VIX. The VIX is down another -5.5% today, after a large plunge yesterday, and is now back below its 50-day average. This is a welcome sign, and lowers the likelihood of another sharp selloff (at least that's what options traders are signaling).

The dollar is higher this morning, which is weighing on commodities. Oil is back down to $67.75, and gold is trading near $990 after a big surge higher this week. Energy stocks are mostly higher, while materials stocks are mixed.

Asian markets were mostly higher again overnight as well, after officials made comments about the need to support a healthy equity market. Can you imagine? Those guys want their stock markets strong and higher, while our President seems to care little how his various initiatives could impact stock prices. If our Administration publicly said they wanted a strong stock market, I think prices would soar.

Trading comment: I have not done a lot of trading this week, as I awaited to see how deep the pullback would be. I mentioned that I have been long gold (GLD) for a while now, and will be looking to take partial profits as gold nears the $1000 level.

long GLD