employment report is noise

I am always amazed at the amount of attention this monthly report gets -- its based on a lot of statistics the accuracy of which is questionable; its adjusted huge from month to month; its a lagging indicator; its noise. I keep my focus on ECRI's leading indicators -- have yet to hear anything from them that says something different from strong recovery and no double dip.

many keep talking about no jobs no recovery -- they miss the fact that even though 15% of the workforce is out of work or under employed the other 85% of americans start to spend a little more freely because they realize their situation is not so precarious. many also screw this up because they believe anything Keynes said about the economy -- he talked about the consumer as paramount. I ask you what income any consumer would have without production? it is production and the capital goods side of the economy that drives income and then consumers choose what to do with that money -- then we learn who the winners and losers were amongst producers.

market has sold off hard here -- is it possible we see more downside -- yes because this time feels a little different -- in retrospect we had what I was hoping to watch out for but missed -- complacency about the early part of the decline -- oh we are only down 2-3% that's not a big deal -- that's different than early September when we fell 3% and everyone panicked. this time we are down more like 5.5% and there are more signs of panic but I don't know if its enough yet -- its possible we need to get to July type lows or back to a 990-1000 kind of area.

the interesting part will be earnings -- will we see the same kind of upside surprises this month and the same kind of market reaction -- at 1080 most likely not but at 1000-1030 we are better set up to see positive reactions to earnings.

Keep an eye on 2 stocks -- ERII and MXWL -- to me they are both well positioned for the future based on secular trends. ERII is a play on water and energy costs -- basically their system is much more energy efficient so in an era of more expensive energy their value proposition expands. Caveat -- they sell into multi-million dollar projects so in this era of reduced credit supply that is a potential problem -- they lowered guidance last quarter because of it. their cash on hand represents about 30-40% of the total market cap to give you an idea of the valuation.

MXWL sells ultracapacitors, which will prove essential to electrifying transportation. Right now most transportation uses some product refined from oil as its fuel -- cars, planes, trains, buses, etc. In the future, electricity will make a dent in gasoline usage as well as diesel. Even if it doesn't, the growing use of consumer electronic products in our cars has created strains on the auto's electrical system -- to make batteries more efficient, last longer and to make sure we don't have to have the biggest batteries they make for our car ultracapacitors will save the day. MXWL is a leading player. I would caution that this is a relatively young industry and setbacks are possible -- the company has been losing money so it is unclear what the longer term profitability of ultracapacitors will be -- I think it will be ok but the revenues will be huge.

my thought was we have a good chance of closing positive today but I'm not sure that is a good thing -- soak up as many sellers as possible so we can stabilize and move on.