The Goldilocks jobs report and the inevitable end of the bull

May 11, 2015 08:44 AM

The "Goldilocks" jobs report. You have to be kidding me. Folks, I have no idea where they get this stuff. It appears that Friday’s jobs report was decent enough to keep the economy going but not good enough so the Fed will raise rates immediately. Roughly speaking we are a country with about 300 million people. I’ve heard pundits say there are 93 million Americans unemployed. That figure obviously includes old folks and children but here’s the point. Everyone knows the job situation in this country is not anywhere near where it could be or should be. Yet the market rallies. We’ve always known the stock market is a perverse mechanism but this is almost like the market cheering unemployment.

Of all the charts we’ve been tracking, the Dow looks most interesting here because it appears like a triangle and now it looks like it could be the beginning of a 5th break out of a triangle. Yes, I know it’s only 30 stocks but there are two items of note here. We like to look at the chart that has the clearest indication and the Elliotticians tell us that triangles are always the next to last pattern in a wave sequence. If that’s the case we can finally get our elusive summer surge. It makes sense if you consider the oil stocks are probably not done, and the stock market likely isn’t going to ultimately fail unless the oil stocks join them.

But the Dow is only 30 stocks even as they may be the most important 30 stocks. What happens if we end up with the Dow leading to the upside? Ultimately that won’t be good and could end up being the market’s demise. While we are looking at triangles, take a peek at the Philadelphia Semiconductor Index (SOX), which may very well also be a triangle but it certainly isn’t breaking out and you can make the case for a divergence right here.

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