He was enthusiastic about Friday’s “jobs report” primarily because the unexpected upward revision of 127 thousand jobs created in October and November.  At the same time, he was puzzled by the GDP report, which was slightly negative.  Of course, it turned out that the GDP report was negative because of continued decreases in government spending and the deferral of capital goods purchases due to the Fiscal Cliff and other governmental uncertainties.

But, the stock market remained happy.  Because the “jobs report” also showed the unemployment rate increased from 7.8% to 7.9%, the probability of any increased interest rates decreased, which is good for stocks.  Plus, the market is smart enough to look below the headline GDP report of negative growth to see the reasons for it.  Then, the ISM report on manufacturing came in stronger-than-expected, over-shadowing the GDP report.

Earlier, Dr. Siegel predicted the S&P would end the year at 1575 or so, which would mean another 5% increase this year and is certainly possible.  The 5% increase in the month of January alone is clearly not sustainable.  It is time for the market to “digest” January’s big gain, and yesterday’s 129 point loss in the Dow is not surprising.  After digestion, the market should continue onward & upward . . . ??

The question in my mind is whether we will get the traditional “summer swoon,” as we have for the last three years.  It is an old Wall Street adage that investors should sell in May and spend the summer at their beach house in the Hamptons.  Of course, it was a self-fulfilling prophecy, as the absence of those big traders depressed the stock market while they were gone.

Due to improved technology, most pundits predict the “summer swoon” will become a relic-of-the-past.  At least, I hope so . . .