Rarely has a nonfarm payroll number been harder to interpret than the one we got this morning. Payrolls fell hard because of the storms that hit Texas and Florida, but the rate of unemployment dropped to a 16-year low while average hourly earnings rose 0.5% month over month, the strongest gain since the Great Recession.
The number caused a lot of heads to be scratched and, in kind of a bizarre oddity, has led to the buying of the highest-growth stocks, as if the payroll data indicated a real slowdown, which, because of the hurricanes, we know is not the case. No matter. The market's back in love with FANG and there's no dissuading nor sating the super-high-growth seekers.
Why is this? I'm blaming the ETFs again. Last night, Costco (COST) reported a number that looked terrific on the surface but the fretting about Amazon (AMZN) was just too much for the company's shares. So Costco's stock gets hammered. That led to Amazon's stock roaring higher and it, as well as Netflix (NFLX) , which announced a price increase yesterday, powered forward.
Does any of this make any sense? I don't know. Here's all I ask. The highest-valued stocks are making big moves and I want to be sure you know what you own and aren't blindly blundering into any of these stocks.
I care not just because the market's been so strong of late, taking up a lot of stuff that's both good and bad. I care because the S&P's proprietary oscillator, the one that gauges how overbought we are, has finally crossed 5, a high level for this indicator, and that means we're likely to have a correction of some sort -- deep, shallow, whatever -- and I want to be sure you know to buy, not sell, what you own. And believe me, if you think it's OK to own a basket of stocks you don't know because that's somehow safer than owning one stock you don't know, then you are sorely mistaken.
So be careful. The odds favor, at this point, a better, lower, later moment to buy.
I'd heed those concerns.