The Earnings / Employment Equation

One of the reasons the stock market is rallying is that corporations watch out for their owners first, their employees second. That is the way capitalism works and that is why the federal safety net exists and that is why the Obama Administration has to champion the stimulus package.  Big layoffs help out earnings down the road, better earnings mean a better stock market.  This is one of the fundamentals fostering the start of this recovery rally.

Look for this stock market to go higher in fits and starts.  The S&P 500 range of 800 to 1080 could be broken down into quartiles of 70 points each, the first 70 were hit yesterday at 870.  It is good that the market was not fooled by the Fed and a classic response was the final result, T-Bonds declined (long term interest rates rose, we didn’t think that was going to happen as we covered our short T-Bond positions before the Fed meeting).  We may have to rethink that part of our overall strategy because classically as money moves into stocks it will leave bonds and precious metals and move into stocks.  But there is time, this market will take its time and the long-term stock market trend technicals are still negative.

The EMA ETF Fund NAV was 1026 at yesterdays close.

8:21 AM CST

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