The Bear Market's Labor of Love
Where IS Jimmy Hoffa anyway?
Stodgy and defeatist. That's how the AFL-CIO is being characterized by dissidents upset with the direction of the union, according to this mornings L.A. Times.
The presidents of five major labor unions representing about a third of all U.S. union members yesterday formed a coalition aimed at rebuilding the waning labor movement and hopefully returning to the glory days of organized labor. Today unions represent about 12 percent of all workers, and according to the Times less than 8 percent of all workers in the private sector, while 50 years ago unions represented more than a third of the workforce.
Yeah? So what. Labor unions are dead. They haven't had any real power since President Ronald Reagan sent air traffic controllers packing in the 1980s... about the time the structural bull market of 1982-2000 began to gain some traction. So why do we even care about what a relatively tiny group of largely irrelevant labor organizers are up to?
In the LA Times article, Nelson Lichtenstein, a labor historian at UC Santa Barbara, told the reporter precisely why we should care, though perhaps even he may not have realized the significance of the somewhat throwaway point he made:
"Unless there is a social and ideological resonance to this that goes beyond their close friends, I think this will just lead to a fragmentation of the labor movement," Lichtenstein said."
Yes, that's it. Although the contextual market indicators I look at are positive...for now, the broader picture in terms of structure, macro, and social mood, are indeed paving the way for a social and ideological resonance to the organized labor movement.
The antagonism between labor and management is always grounded in economic benefit and the trickle down from the bottom line that goes straight to the top. If workers feel they are benefitting from some of the fruits of their labor, not equally benefitting mind you, just benefitting, the friction between the worker and The Man is reduced. The cyclical swings of social mood play a significant role in this that should not be underestimated.
Labor unions are nothing if not a bear market phenomenon. They thrive under bear markets and dark social mood conditions, they wane under bull markets and bright social mood conditions.
Meanwhile, the New York Times reports this morning that Ron Gettelfinger, the president of the United Automobile Workers, is taking a tough line with General Motors (GM), saying he would not agree to change GM's labor contract before it expires in 2007. Want to see bear market psychology at work, the developing battle between elites and laborers? Read this article in the Times.
The conventional wisdom seems to be that the unions are just bit players in a larger stage production. But I would not underestimate them just yet. Stodgy and defeatist today, post-post modern and hip tomorrow.
But enough of the big picture, where are we in the here and now? Short-term we have now moved to levels last seen in March in a number of indicators. The percent of stocks above the 50-day moving average for all stocks on the NYSE is almost exactly at the March highs. The percent of stocks above the 50-day on the Nasdaq, however, has already exceeded the March highs. Then why is it we continue to see S's over N's?
The reason for this disparity is largely mechanical. Because the Nasdaq has been the hardest hit, the 50-day moving averages in many of those stocks turned down early and are essentially "easier" to move above than they were in the first half of the year. This is certainly true on a relative basis, and is reflected in the percent of stocks on the NYSE and the Nasdaq that are on point & figure buy signals. The NYSE bullish percent is above 60%, meaning 60% of the stocks on the NYSE are on point & figure buy signals, while less than half of the stocks on the Nasdaq are on point & figure buy signals.
So the context is positive, but still overreaching a bit in the short-term. As John Succo pointed out yesterday in "Zero Volatility", you can almost feel the market's attention span waning. Stay sharp and no matter what happens, make sure you live to play another day.
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