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Weekly Economic and Stock Market Commentary: October 11, 2021


Weekly Economic and Stock Market Commentary: October 11, 2021

As for the stock market specifically:

The major market averages shook off a very bad start to the scary month of October to end the week with slight gains. The markets even sloughed off an employment report that came in well short of projections. In any event, a weekly gain is always welcomed.

Last week showed more than a glimmer of hope for the US markets – NO, THIS IS NOT A PREDICTION. Both the S & P 500 and the Nasdaq Composite formed chart patterns known as “bearish signal reversal.” This is a buy signal after a series of consecutive sell signals.

Here is the S & P 500. It is not the classic bearish signal reversal, but it qualifies. This chart made 3 consecutive sell signals, and each bounce, until last week, didn’t come back as far as the previous bounce.


Let’s look at the Nasdaq Composite. The Nasdaq Composite made 4 sell signals before making a buy signal last week.
Each index fell Friday and may fall some more before I post on Tuesday. I am not smart enough to tell you what will happen, but I can tell you what did happen, and how it can affect risk.

It was a split decision for the bullish percent indicators last week. The NYSE and Optionable indicators each had strong a strong week, but the OTC indicator lost some ground. I recommend WEALTH PRESERVATION at this time.

Remember, Xs mean OFFENSE or wealth accumulation, while Os mean DEFENSE, or wealth preservation.

Below is where our indicators stand as of October 8, 2021 (Courtesy Dorsey, Wright, and Associates).

On a general note:

The Department of Labor announced the US economy added 194,000 jobs in September. This was well below the consensus estimate of 530,000 new jobs. The unemployment rate dropped to 4.8%. Another bad note was that the labor participation rate fell to 62.1%.  These numbers come at a time when the Labor Department also tells us that employers have a record-high number of job openings. What I did find surprising is that more people left the labor force despite the end of extra unemployment benefits. It will be interesting to see what happens when the October numbers come out. The August number was revised downward to 306,000. The report noted wage gains for employees, but the gains did not keep up with inflation. In English, it was not a good month for employment statistics.

The Commerce Department released balance of trade numbers for August. The report informed the trade deficit came in at $73.9 billion dollars. That was another record deficit. Exported goods hit a 213.7 billion dollars. Imports rose 1.4  percent to $287.4.

Please call me if you have any question on this Weekly Economic and Stock Market Commentary.