The markets liked the payrolls data released Friday which reversed the steady declines (after the initial pop following Trump’s Congressional address), closing the week down .42% for the S&P 500. Moments after the jobs data was released, White House Press Secretary Spicer immediately tweeted that things were great.

During the election, Trump stated that the published numbers from The Fed on unemployment were phoney and not to be trusted. Not so anymore, as Trump has now reversed his position: according to Spicer, he has stated, “They may have been phoney in the past, but it’s very real now.” Which got a big laugh from the press corp.

Unemployment numbers released Friday morning showed positive reading for the US economy by posting a low 4.7 %. It’s considerably lower than the 4.9 % it showed last year around this time.

First and foremost, devastating bear markets mostly occur during recessions/depressions. The single best recession indicator is a 12-month moving average of the unemployment rate. When the unemployment rate moves over its 12-month moving average, a recession is more likely to unfold. Currently, that’s showing we are doing just fine. Like all indicators, it’s not perfect and does give some false positives, but certainly should not be ignored.

While we are on the topic of indicators, market breadth is eroding with the last leg of the rally. In fact, the Hindenburg Indicator (which looks at new highs versus new lows) is flashing red.

Considering that just seven days ago  we made all-time highs in the key indices, this alarm is ominous. Although its reliability is iffy and the exact timing dubious, it bears paying attention. On the flip side, other breadth indicators are also weak but rebounding, and could even now be read as short-term oversold- setting up for yet another run to new highs.

Sentiment indicators show no fear, with volatility low, but not excessively so. There has been a pause in some of the more explosive post-election moves, such as trannies/infrastructure (IYT) and small caps (IWM).