OH SH*T! The Labor Market JUST Flashed the Same Setup That Crashed Stocks in 2000 and 2008!

US Labor Market Analysis & Investment Strategy – January 2024 Report

Key Concepts:

• Seasonal Adjustment: A statistical technique used to remove predictable seasonal patterns from data, allowing for more accurate comparisons between different time periods.
• Non-Farm Payrolls: The number of jobs added or lost in the US economy excluding the farming industry, a key indicator of economic health.
• BLS (Bureau of Labor Statistics): The US government agency responsible for collecting and reporting labor market data.
• JOLTS (Job Openings and Labor Turnover Survey): A survey that measures job openings, hires, and separations in the US labor market.
• 100-Day Moving Average: A technical analysis indicator representing the average closing price of a stock over the past 100 days, used to identify trends and potential support/resistance levels.
• Profit Factor: A ratio used in trading to assess the profitability of a system, calculated as gross profit divided by gross loss. A factor above 1 indicates profitability.
• WOFF Distribution Pattern: (Weak Offerings, Failed Follow-Through) A chart pattern indicating potential selling pressure and a possible price decline.
• DXY (US Dollar Index): Measures the value of the US dollar relative to a basket of six major currencies.

I. Initial Labor Report Discrepancies & Revisions

The January 2024 US Bureau of Labor Statistics (BLS) report initially indicated a positive job growth of 130,000, with the unemployment rate falling to 4.3%. However, this figure is heavily reliant on government seasonal adjustments. The unadjusted number revealed a loss of 2.649 million jobs. This discrepancy highlights a significant overstatement in the reported job gains. Furthermore, previous months’ data are undergoing downward revisions, suggesting the January number will likely be cut in half. The BLS benchmarking process, comparing initial payroll estimates to the Quarterly Census of Employment and Wages, revealed a removal of 862,000 jobs and slashed last year’s gains by nearly 70%, from approximately 49,000 per month to just 15,000. This pattern precedes recessions and explains the low economic confidence reported by many Americans.

II. Wage Growth & Hours Worked – Recessionary Indicators

While the BLS reported a 0.4% increase in wages, resulting in a 3.7% year-over-year rate, this includes managerial positions. Wage growth for average American workers slowed to 3.7%, the lowest level since 2021 – a recessionary trend. However, wage growth is a lagging indicator; employers tend to maintain wages for retained employees even during economic downturns. Analysis of average hourly earnings for production and non-supervisory employees confirms this lag. Crucially, average weekly hours worked increased slightly to 34.3, but remain at January 2023 levels. A drop in weekly hours is a key predictor of recession, as demonstrated by historical data comparing average weekly hours of production/non-supervisory employees to non-farm payrolls. Job cuts typically precede reductions in hours.

III. Market Reaction & Technical Analysis – NASDAQ 100 Breakdown

The stock market reacted negatively to the report, initially gapping up on the headline number but reversing after the open. This reaction is attributed to the underlying weakness revealed by the unadjusted data and the concerning trends in wages and hours. The NASDAQ 100 is currently testing its 100-day moving average. Historically, failures to hold above this level have consistently preceded market crashes or corrections (examples cited from February 2025, March 2022, and 2019). The presenter’s personal trading screen confirms this critical juncture. The market is signaling a potential downturn.

IV. Bond Market Validation & Future Revisions

The presenter anticipates significant downward revisions to the January payroll report, mirroring past trends (5-6,000 jobs expected to be removed in the next revision, with potential for a 65,000 job reduction when annual revisions are applied). The drop in part-time work for economic reasons is not due to people finding better jobs, but rather the end of seasonal holiday employment. A rate cut by the Federal Reserve is unlikely without a significant deterioration in the labor market. The bond market is also signaling weakness; yields initially jumped on the report’s release but then settled down, with the front end of the yield curve turning negative – indicating expectations of weaker economic growth. The correlation between non-farm payrolls and two-year Treasury yields historically shows yields leading payrolls lower before recessions.

V. Investment Strategy – Profiting from the Downturn

The presenter outlines several investment strategies based on the anticipated economic downturn:

• Bearish Scenario: Diversify away from technology and discretionary stocks into defensive sectors like utilities, healthcare, and consumer staples. Invest in gold and silver, utilizing stop-loss orders due to volatility. For experienced, risk-tolerant traders, consider tactically shorting big tech stocks, citing insider selling and the WOFF distribution pattern. Increase cash holdings (minimum 20% recommended by Jeffrey Gundlach) to capitalize on potential buying opportunities during a market crash. Consider short-term Treasuries. If the DXY dollar index correlation holds, long-term bond prices could rally.
• Bullish Scenario: Buy dips, anticipating a potential squeeze of heavily shorted hedge funds and a possible rally to new all-time highs.

VI. CTA System Performance & Offer

The presenter’s CTA (Commitment of Traders Analysis) subscribers have achieved a 4.35% return in just three days on gold mining stocks. The system boasts a 1.78 profit factor, indicating a higher win rate and smaller drawdowns. The system utilizes machine positioning analysis to identify optimal swing trading opportunities, back-tested for maximum profitability. A free 30-day trial is offered, providing access to daily trade updates, risk control levels, and a weekly performance review.

Notable Quotes:

• “When the job market goes, the economy, and the markets are next.”
• “Your wealth depends on it and I'm going to show you how to multiply it with what's about to hit.”
• “Every headline number has been revised lower.” (referring to past BLS reports)

Data & Statistics:

• January 2024 Non-Farm Payrolls (Initial): +130,000
• January 2024 Non-Farm Payrolls (Unadjusted): -2,649,000
• Unemployment Rate (January 2024): 4.3%
• Wage Growth (Year-over-Year): 3.7%
• Average Weekly Hours Worked: 34.3 (matching January 2023 levels)
• CTA Subscriber Return (Gold Mining Stocks – 3 days): 4.35%
• CTA System Profit Factor: 1.78
• Last Year’s Jobs Gains Revision: Reduced by nearly 70% (from ~49,000/month to ~15,000/month)
• BLS Benchmarking Revision (Jobs Removed): 862,000

Conclusion:

The January 2024 US labor market report, despite initial positive headlines, reveals underlying weaknesses and potential recessionary signals. The discrepancy between adjusted and unadjusted payroll numbers, slowing wage growth, stagnant hours worked, and negative market reactions all point towards a deteriorating economic outlook. The presenter advocates for a cautious investment approach, emphasizing diversification, defensive positioning, and potential shorting opportunities, while also highlighting the performance of his CTA system as a means to navigate the anticipated downturn. The bond market’s validation of these concerns further reinforces the need for vigilance and proactive portfolio adjustments.