Well folks, that's another week officially in the books (even though it was nothing worth recording). For a short while this morning it looked like the bulls were going to respond favorably to the miserable employment data, but it didn't take long for investors to decide the glass was half empty rather than half full. Then later in the day traders got a little bullish again. Mostly though, it didn't seem like investors were interested in doing much of anything on Friday, still unsure of the market's true direction here. We'll look at what's happening - and not happening - with the broad market in a second. The first thing I want to look at with you is obviously this morning's jobs information. A lot of folks were trying to put a positive spin on some alarming numbers, but I'm calling BS on their calls to ignore the bad news. The Rest of the Unemployment Story In case you didn't hear, the Department of Labor reported that only 74,000 new jobs were created last month (87,000 new jobs when not factoring in government job layoffs). It's a big surprise, considering we've been adding payrolls at a clip of about 200,000 per month for a while now. It was also a surprise given that payroll processor ADP said we added 238,000 jobs in December; the two numbers usually jive. I'm more inclined to use the DOL's number, however, so clearly I'm not impressed with last month's job growth. It took about 0.3 nanoseconds for the bulls to recommend ignoring the weak-looking data, as cold weather was supposed to crimp hiring in December. I get the premise. Heck, I would even agree with the premise were it not for one thing... we tend to get cold weather in most Decembers, but we've still not seen a December jobs-growth number that was this weak in a long, long time. For that matter, while I know we had a bit of a cold spell last month, I don't recall it getting debilitatingly cold anywhere in the country for very long last month. Maybe I just missed it, but I don't think I did - last month was pretty typical for December, weather-wise. So, I'm calling BS on the "last month's data was errant" stance. The other big number you probably already heard is the raw unemployment rate. It fell from 7.0% to 6.7%, almost entirely because the number of folks who are in the work force (whether they have a job or not) plunged to multi-year low levels. Since nobody else bothered giving you the details and a fair assessment, I'll do the honors. The numbers you didn't hear: As of December, 144.586 million people in America were employed. That was a tad higher than November's 144.443 million workers. In fact, it's a multi-year high level of employment. Also as of December, there were only 154.937 million people who consider themselves to be in the workforce, whether or not they're actually working. That's down a bit from November's 155.284 million. This tally doesn't consider whether or not those 154.937 million workers are collecting unemployment benefits. The number of officially unemployed (still in the work force, but not working) people fell from November's 10.841 million to 10.351 million people in December. This group does not include the folks who are no longer looking a job. In fact, about 347,000 people "voluntarily" took themselves out of the work force last month, none of whom are counted in the "unemployed" total. Impressed, at least a little? It all sounds pretty good on the surface, but as always, there's more to the story. The problem is, while employment is technically up and the ranks of the unemployed are technically down, the size of the nation's population has grown considerably faster than the number of employed people. The vital stats are: As of December, only 62.8% of the population is participating in the labor market. That's back to a multi-decade low. One could argue that these people dropped out of the workforce by their own free will, which is (technically) probably true. But, with many of them unemployed for years now and facing rejection after rejection, there may have been more "frustrated out of the work force" than "walking away with no qualms" going on last month. Anytime you reach numbers not seen in decades, there's a bigger, overarching problem that's out of most individuals' control. Also as of the end of December, the employed/population ratio remained at November's reading of 58.6%. It's been worse. It hit a multi-decade low of 58.2% in October. Aside from October's dip though, we're still at multi-decade lows in terms of the total percentage of people working. Again, you don't reach record-breaking numbers without something very big and very systemic in play. Here's the long-term trend of all this data.. As for what it means to you, well, I'll say the same thing I've been saying all along - the unemployment picture isn't everything it could be, and isn't everything some people say it is, but it's more good than bad. I'll put it like this... it's strong enough to support more upside for stocks, though it's not strong enough to support huge economic growth. We need to keep our expectations tempered. Now, about the near-term market.... The Bulls Are Running Out of Steam, & Reasons Actually, before we look at the market after Friday's action, there is one piece of trading business I want to get out of the way - go ahead and sell your Skyworks Solutions (SWKS). That should hypothetically lock in a gain of about 4.3% from our November 25th entry of somewhere around $26.60. I know it's not a lot, but I'd rather walk away with a small gain than be forced out at a loss. If you want to know why we're pulling the plug, the answer is simple - if this thing was going to break past its ceiling around $28.60, it would have done so by now. As it is, SWKS is struggling to move back above its 20-day moving average line. I'll take the hint. We can find other, better movers to latch on to. Everything else in the portfolio is still looking solid enough to stick with for the time being. As for the market, since we brought it up yesterday we'll let you know today that the Dow Jones Industrial Average did NOT close under that key level of 16,419. The NASDAQ's volatility index, the VXN, didn't close above its critical line at 15.1 either. In fact, the VXN closed much lower today, taking it out of reach for a breakout (which would have beeen bearish for stocks). On that note... While the S&P 500's momentum is technically bullish thanks to today's late perk-up, I'll confess I'm nervous about how low the VIX has gotten. Remember how we said too much complacency and confidence can be an unhealthy thing, as it tends to peak right when the market is making a peak of its own? Yeah, well, the VIX is back at a major technical floor that tends to get tested right as the S&P 500 is making a near-term top. Take a look. What's it mean? Well, I wouldn't bet the farm that the VIX is dropping a hint here. The VIX was pretty low in October and November, and the market rallied then anyway. More often than not though, when the VIX gets this low it becomes a problem for stocks. What's different this time around is that the VIX is low while the S&P 500 isn't bumping into its upper Bollinger band. Let's just wait and see where this is going; no need to jump to a conclusion right now, since we can't do anything about it anyway. My mental trigger for a pullback still stands at 1820. With all of that being said, I believe John Monroe over at the SmallCap Network Elite Opportunity summed up the current situation about as well as it could be summed up here. So, I'll just poach this snippet from today's SCN EO newsletter: "Let's be objective about it though. One month of jobs data does not create a trend. As a matter of fact, we've seen bad months like this before, only to have the next make up for it. However, should this theme continue, that's not going to be a good thing. Modest tapering? Strike one. Poor jobs data? Strike two. Now if top and bottom line numbers don't start delivering, especially now that we're entering what I consider to be the most important earnings season in years, that would be strike three and the markets will likely end up providing that much anticipated deep pullback we've been wanting for quite some time. I say that because although a deep pullback would likely freak a lot of investors out, we'd be looking at it as an opportunity to position ourselves for the next big leg up, which we still believe is inevitable." He's right - prior to, well, right now, there was always something to prop the market up. Those crutches are slowly vanishing, however, and it's not clear if the market can stand on its own two feet or not. The bulls were digging in today as the session came to a close, but it was a low-volume buyback, and strange things happen right in front of weekends. Anyway, Monroe's comments got me thinking... given how much John and his team "see" with stocks, it's not hard to understand how the SmallCap Network Elite Opportunity consistently beats the living daylights out of the market. By the way, if you've looked at the SCN EO's main page before and decided it wasn't for you, you may want to look at the new landing page. It's still the same great newsletter it's always been, but the new home page explains things in a way that I personally think means more to investors. I also noticed the free two-week trial is still available for the time being, but I want to say I heard a whisper that the free trial wasn't going to be offered anymore. Looks like there's a reprieve for the time being, but you may want to take your test drive ASAP in case it's going away soon. Here's how, or cut and paste this link: https://www.smallcapnetwork.com/pages/SCNEO/v1/