Sunday, 6 April 2014

ETF Focus: That screeching sound is the market losing momentum

The much-awaited Non-Farms Payroll Report didn’t produce any positive result for bulls.
The report on Friday showed 192,000 jobs vs. 206,000 expected and the prior report was revised higher to 197,000 from 175,000. The unemployment rate remained at 6.7% vs 6.6% expected. Inside the numbers though conditions weren’t that rosy.

In fact, looking at Janet Yellen’s “dashboard,” many data points weren’t positive including: declines in wages from 0.4% to 0.0%; only 1,000 new manufacturing jobs created; temporary Help came in at 29,000; retail was just 21,000 and leisure and travel was a mere 29,000 — not to mention that in combo these jobs are dominated by low-wage paying part-time work.

Plus, underemployment, the labor participation rate and the long-term unemployed numbers are still bothersome.

Overall the report is dovish for the Fed, as these data points were so weak the Fed is less likely to raise interest rates any time soon.

So, why the market decline?

Bulls are too complacent and too many sectors were overstretched. Social Media SOCL, -0.39%   and Biotech IBB, -1.38%   are two sectors exemplifying this condition. These sub-sectors in turn spilled losses over to larger parts of the market, notably the NASDAQ 100 (down 2.33%) and other major markets like small-caps. However, overseas markets for the most part were able to avoid much of the selling.

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