Ouch. Well that wasn't very much fun. Gotta be honest about Friday's decimation though... I really don't think it's a glimpse into the current investor psyche. That is to say, I seriously doubt the market has been thrown over a cliff and is now going to plunge to its doom. If anything, I suspect Friday's big pullback hit the proverbial reset button on the rally, and I'm looking for the bulls will come back swinging next week. I'll explain why I believe that in just a moment. First, let's give you the rest of the employment story you didn't get today. I've also added some of my own data to the mix that should really put things in a different perspective regarding the true state of employment in the United States right now. After that, we've got another exit to make for one of our positions. The Rest of the Unemployment Story: Retirees You probably already know the unemployment rate held steady at 6.7% in March. You also probably already know the United States added 197,000 new jobs last month. And truth be told, you could easily come to a bearish or a bullish conclusion based on that data, depending on whether you wanted to be an optimist or a pessimist. Well folks, when you take a look at the data you didn't hear much about this morning, I've got a feeling you're going to wander over to the optimist camp... at least in terms of the job situation. As of right now, there are 145.742 million people in this country with jobs. That's a pretty solid improvement on February's 145.266 million. In fact, it's the highest level of employment we've seen since mid-2008. What's a little - though not a lot - odd is how the number of unemployed people who are still in the work force didn't change much. It now stands at 10.486 million, just a tad higher than February's 10.459 million. How's that happen when we managed to add (net) jobs in March? Because the size of the labor force expanded, from 155.724 million in February to 156.227 million last month. In other words, a bunch of new people entered the job market in March, though not all of them found jobs. On a proportional basis, we made just a smidgen of net progress... not even enough to move the needle on the unemployment rate. That being said, we did make just a smidgen of progress where I've repeatedly said it matters the most.... the labor force participation rate [the number of people who want to be working, whether or not they're working, compared to the populous], and the employed/population ratio [the percentage of our populous that has a job]. Well, the bad news is, both figures are still near rock-bottom, multi-year lows. The good news is, at least both improved a little last month. The labor force participation rate grew from 63.0% to 63.2% in March, while the employed/population ratio grew from 58.8% to 58.9%. The chart below really puts all this data in perspective. We're not doing great in terms of employment, but we're making some progress. It's better than nothing. If I had to give the employment situation a school grade, I'd still give it a C. So what's this big revelation I've got for you regarding jobs? It has to do with the number of retired people, and how a greater number of retirees is skewing - and rightfully so - the labor force participation rate and the employed/population ratio lower. It's an idea that makes sense, but without actual data, I'm not willing or able to come to any conclusions on the matter. Well ladies and germs, I found the data.... sort of. I'll be the first to acknowledge it's not the absolutely ideal data set to use as the basis for the discussion, but it's close enough. What I'm talking about is the number of people in the country who are retired, as measured by the number of people who are receiving retirement benefits (not disability or survivor benefits, but retirement benefits) from Social Security. It's a pretty good approximation of how many people are leaving the workforce not because they've been forced out by job-loss, but because they wanted to get out and have no desire to become an employee again. And what did I find? Incredibly enough, beginning in 2008 (and admittedly at least somewhat spurred by a lousy economy), the pace of baby-boomers getting out of the work force started to quicken. It was matched - almost person for person - by the plateau of the labor force. The population continued to grow during that time, but if my ballpark math is relatively on target, the exit of more retirees than usual beginning around that time freed up a lot more jobs for new workers than I think we generally presumed. The size of the labor force should have been somewhat stagnant then, all other things being roughly equal. What this data means is, while the labor force participation rate and the employed/population ratio are still at alarmingly low levels, they really should be at lowish levels compared to long-term norms - we've never had this many retires (as a percentage) in the U.S. populous before. While the numbers still don't perfectly add up, the low-participation-rate argument doesn't hold quite as much water as it once did....and this is coming from a guy who was using weak participation figures as a reason to ring the alarm bell! Don't misunderstand; we've still got problems we need to fix. The unemployment rate only considers the people who want jobs (but don't have one) to the total number of eligible workers, and that figure still needs to be sub-5.0% for the economy to be truly healthy. But, seeing what I see with the chart above, we can conclude that things are at least a little better than we might have otherwise figured. Flispide: That's more retirees that working people have to support than they've ever had to support before. So Bad It's Good Yes, I know Friday was a horrific day for stocks. I wasn't kidding you when I told you yesterday, however, that the best thing for the market today would be a big pullback to clear the decks for a renewed rally next week. I'm sticking with the argument, but with one caveat I'll give you below. Just for the sake of shaking things up, I'm going to let the Small Cap Network Elite Opportunity's John Monroe explain things. In today's EO newsletter, he said: We made it pretty clear earlier in the week it's all systems go [bullish] with one exception. Over the last couple of days, I pointed out the strong possibility of the NASDAQ being tested one final time before the shorts would throw in the towel and as it stands right now, that test seems to be in favor of the shorts. However, this is precisely what we wanted to see and although the index has moved lower over the last few days now, this is where it has every right to find a base as soon as today or early next week, settle and rally. The only problem at this point is the NASDAQ needs to find a base soon or things could potentially get pretty ugly pretty quickly. Here's why... After bottoming last Thursday, the index continued higher until yesterday and has now retraced roughly 3/8 of its complete move from last Thursday's low to yesterday's high. It's all logical and as long as we don't retrace much more than about 5/8 of that move, which sits at roughly 4,190, I'm not going to be all that concerned just yet. However, should the S&P and DOW both fail on their new highs and more importantly, the NASDAQ somehow ends up taking out last week's low to the downside, that won't be good because the continued move back to the downside would confirm the short-term downtrend the NASDAQ initiated back on March 7th. Do you get what he's saying? The gist of it was - and this is the same thing I described on Thursday - the market needed to go through one ugly day in order to move forward again... one stop back, two steps forward. Well, the NASDAQ Composite ended up pulling below that 4190 mark he was talking about. Heck, the NASDAQ hit a low near 4118.7. There's still a big floor there, though. That's where the composite reversed course for the better a week and a half ago. To see it find a floor there again is at least a little significant. Either way, his thinking about the way the NASDAQ is taking shape still basically applies to our chart of the S&P 500 - any of the would-be sellers that were holding the market back before today were likely flushed out today, leaving nobody behind but the buyers. I also find it a little suspicious, in a bullish way, that the S&P 500 only needed to brush the 20-day moving average line today for the buyers to start sniffing around again. The only reason I'm not willing to go ahead and take the plunge and say be bullish now is that a lot can happen over the weekend. The smart thing to do is wait until Monday to see if the bears are done and/or if the bulls are going to get serious. I'm still expecting us to bounce back into an uptrend, but it costs us very little to be sure. I'm fine with waiting for a little more certainty. The worst-case scenario for the S&P 500 is a break back under 1866, at which point it's apt to hit a very strong floor at 1840. Honestly though, I don't even think things will get that ugly. There was no real fundamentally-driven reason stocks tanked on Friday, which is why I feel traders are going to come back next week in the same decent buying mood they were in just a few days ago. As much as I'd like to show you the rest of the analysis Monroe gave the Elite Opportunity's subscribers today, I can't. It wouldn't be fair to current EO members. If you'd like to see some great insight about how the NASDAQ is apt to shake out from here, however, your free two-week trial to the SmallCap Network EO includes access to the newsletter archives. Here's how to get it, or cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/ Say Goodbye to Another One I really hope everyone took my advice and shed their Frontier Communications (FTR) trade this morning - at something around the open at $5.70 - before the bears really got a hold of it later in the day. For those of you that really pay close attention to our picks, you may have seen Silicon Image (SIMG) broke under our mental stop level of $6.50 today. Nine times out of ten I would go ahead and make the exit, no questions asked. This time though, I'm going to hold onto it a little longer. I've got a feeling the only thing that drove SIMG lower today was the market's bearish tide. Once that move is nothing but a memory on Monday, I'm looking for the bulls to inflate Silicon Image again. There was very little volume behind today's pullback, so I'm willing to roll the dice a little. If we don't see any bullish interest come Monday, I may change my mind then. Speaking of our holdings, Genesco (GCO) was upgraded to a buy at Sterne Agee today, sparking about a 3.0% pop for the stock. Every little bit helps. As it stands right now, we've got five stocks left in the hypothetical portfolio, and one of those is on the bubble. I'd like to have more for you, especially if we're headed into a marketwide bounce next week. Thing is, I'm just not finding any risk/reward scenarios I like well enough to take a swing on. But, do you know who has nine open trades (with another one on the way, I believe) right now? Subscribers to the SmallCap Network Elite Opportunity. And of the nine, five of them are up by double-digits. That's heroic in this environment. I've said it before and I'll say it again.... the SCN EO is the way to go if you want more big winners in your portfolio. Learn more about your free trial, or cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/