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What does falling job growth indicate?

By Colin Twiggs
September 1, 2017 9:30 p.m. EDT (11:30 p.m. AEST)

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Colin Twiggs is a director of The Patient Investor Pty Ltd, an Authorised Representative (no. 1256439) of MoneySherpa Pty Limited which holds Australian Financial Services Licence No. 451289.

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Job growth fell to 156,000 for August, from a high of 210,000 in June, according to the latest BLS stats.

Job growth

Unemployment ticked up from 4.3% to 4.4% for August.

Unemployment

What does this mean? Very little, if we look at our real GDP forecast based on total nonfarm payroll multiplied by average weekly hours worked. GDP growth is slow but steady.

S&P 500 with Twiggs Volatility

The recently published Philadelphia Fed Leading Index for July has slowed but remains comfortably above the early warning level of 1. The index normally falls below 0.5 in the months ahead of a recession.

Philadelphia Fed Leading Index

The S&P 500 is testing resistance at 2480 after a weak correction that respected support at 2400. Bearish divergence on Twiggs Money Flow continues to warn of selling pressure but this seems secondary in nature. Breakout above 2480 is likely and would offer a target of 2540*.

S&P 500

Target 2480 + ( 2480 - 2420 ) = 2540

The Nasdaq 100 is testing resistance at its all-time high of 6000. Bearish divergence on Twiggs Money Flow again warns of secondary selling pressure. Breakout would offer a short-term target of 6250 and a long-term target of 7000.

Nasdaq 100

Target 6000 + ( 6000 - 5750 ) = 6250

The bull market remains on track for further gains.

If you want to have a better performance than the crowd, you must do things differently from the crowd.

~ Sir John Templeton



 
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