Thoughts

Nasdaq down for 10 straight days; I believe that is the first time in history that this has happened.

More Than Meets the Eye to Factory Orders

Capital goods orders/shipments (excluding aircraft and defense) were revised higher.
This indicates that no double-dip or significant drops in economic activity are imminent.

There has been negative chatter surrounding the factory orders drop of 1.4% (compared to the expectation of a more modest 0.5% decline).

In the case of factory orders, however, there was more than met the eye, as the entire weakness was in the aircraft segment.

Importantly, capital goods orders/shipments (excluding aircraft and defense) were revised higher, indicating that capital spending growth in the quarter ended June 30, 2010, will accelerate from first quarter 2010 and that no double-dip or significant drops in economic activity are imminent.

Doug Kass is a very smart investor; I read that he has continued to expand his net long exposure this morning - makes me ever more confident.

The jobs report, while weak, seems to negate the doomsday double-dip scenario that has been incorporated in equities.

I believe that the year's lows might be in place. I expect a relief rally in the days ahead.

Historically, the 'Death Cross' has been a poor indicator of stock market weakness.

Hyperbole and emotion have ruled these past few weeks. Which brings me to the incessant references to the S&P 500's "Death Cross" -- a technical condition that occurs when the S&P's 50-day moving average declines below its 200-day moving average.

The "Death Cross" has been a poor indicator of stock market weakness over time. According to Weeden's Steve Goldman, there have been a total of 20 "Death Cross" signals since 1950 -- the S&P 500 was lower 55% of the time and, on average, slipped by only 0.5% one month later. Three months later, the S&P was, on average, 1.75% higher and lower less than 40% of those 20 data points.

In fact, on only one occasion (October 1987 crash) after the dreaded "Death Cross" did the index swoon by over 15%.

According to Goldman:

In the six signals that occurred after the S&P had declined by more than 10%, the S&P declined by 2% one month later and was lower 50% of the time. But three months after the signal went into effect, the S&P advanced by 2% three months later and by 4.5% six months later. One year later, the S&P had advanced by an average of 9% and was higher 83% of the time.

In other words, while the "Death Cross" has been in place in every bear market, "it does not mean that every time this happens a bear market occurs."

I have little to add to the litany of commentary on this morning's jobs report......other than to write that most outcomes, except a better number, seem to be now baked in to stock prices.