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Pondering Payrolls



All eyes turn to the Unemployment number tomorrow. Ahead of the release, there are a few stats worth mentioning:

First, the May Unemployment report has a strong upside bias for the Nasdaq. Since 1980, the month of May has produced the highest percentage of "up days" on Unemployment Friday with 75% closing higher. The next best month during that period was October with a 70.83% positive close ratio.

Secondly, I wanted to see if there was any bias to the month that followed a strong number. Last month's payroll number showed an increase of more than 300,000 jobs. It's the first time we've seen a number over 300,000 since May 2000. Over the last six years, we've only seen a number over 300,000 ten times. The table below shows the next month's actual number (not revised) and close for the major indices.

I showed these stats to the always insightful Michael Santoli and he opined a valuable question. Is the bias still positive in a rising rate environment? And so, I looked back 20 years and found 40 months that showed a payroll number of 300,000 or greater. Over the entire period, the close was nearly split. By factoring in a rising / declining rate environment, the results were still mixed. Nonetheless, the most recent ten results resolved positively for stocks.

As always Minyans, these stats are presented for your interpretation. Past performance does not indicate future results.

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No positions in stocks mentioned.

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