The market was shocked to learn that 702,000 jobs were lost in the month of March. Far exceeding the 100,000 – 150,000 estimate the market was anticipating. The scary part of this insanely high number is that the model that predicts the job gains / losses was taken from the week prior to the massive meltdown, which was a week where there were only 282,000 people who filed for unemployment benefits. Since the week following the sample data that fed into the report had 3,300,000 people filed for unemployment, the next 6,600,000, and future number expected to continue to climb, report we will receive in May will certainly be by far the worst number ever reported. Eventually, all of the people filing unemployment claims will roll into the job loss figures. Expect this number to continue to climb.
Since virtually all economic reports that measure jobs are measuring the market post-Covid-19 meltdown are negative, there is very little to provide incentive for stocks to climb. With the technical move higher than we experienced last week, recovering the easily predictable 30% – 50% of total loss, stocks now have a clear path to move lower. I believe sticks will fall below the lows we saw a few weeks ago. I also believe that the mortgage market will begin to stabilize soon, which will allow mortgage interest rates to fall back below all time lows. It will just take time for things to play out.
We will maintain a locking bias.