As we wrote earlier - our equity strategy remains unchanged - our target for the S&P 500 is 1228.

The last time non-farm payrolls dropped month over month was May-June 2009 - during that period the S&P 500 was essentially flat - this is when the market began looking forward and not back. Since then, the S&P 500 has climbed 24% - it appears the market is going to continue to look toward the future.   The weakness in the  dollar coupled with rising hourly earnings should be enough to keep the bull market rolling...for now. 

We were initially concerned about the amount of people that simply dropped out of the workforce - the civilian labor force dropped by 661k - a BIG number.

BUT this is from the household survey, which is essentially a phone call to homes and therefore less reliable as an indicator of employment.  It is for this reason that we believe we could be approaching a point of maximum negativity.

We view the drop in the civilian labor force as a contrarian sentiment indicator. Over the next few months, as the economy improves, the unemployment rate may actually RISE as people re-enter the workforce. Therefore, our key employment indicator will not be the unemployment rate, rather it will be the total amount of people employed.

How We are Trading the Point Of Maximum Negativity

If indeed, the labor market has reached a point of maximum negativity then we can use any weakness in retail stocks to add them to the portfolio at attractive levels.

To that end we are buying a 1/3 position on Amazon (AMZN).

Why AMZN?

We find AMZN an attractive long trade for 4 reasons:

1. Online Sales Have Outpaced Traditional Store Sales
2. While the Kindle faces Competition - AMZN is the clear leader
3. UPS has Increased Shipping Rates - By Extension Backing the Online Sales Trend
   
4. AMZN is at a technically key level.
   

If the December uptrend in AMZN is the first leg of a 5 wave up sequence then we would expect any correction to go no further than a 78.6% retracement. At this point AMZN is holding this retracement level and presents a low risk, high reward point of entry.

Our stop loss will be placed below the December 18 low of 125.65. Our upside target for AMZN is between $145.73 and $156.22.