The Cause of the Run will Cause the Pullback

First, I gotta point out a headline that just shocked me today...

"New jobless claims unexpectedly plunge to 601,000"

Yeah, thats great. Only 600K more people out of work. Great freaking news!!! This after ADP reported *only 451K lost their jobs. The runup in the market yesterday was fueled by the ADP numbers which proved once again to be inaccurate. Even so, with 150K more than the ADP number, 600K in job losses is seen as great news. We are all doomed.

The main reason for the recent run is lower earnings estimates, higher unemployment estimates, lower expectations in general. In fact, expectations were so grim, we would truly need to be in a near depression state not to meet or exceed them. Thus a jobless rate of 600K new unemployed workers is seen as positive and a sign of the bottom. Go figure. Unemployment insurance claims is now at 9% not including those who no longer unqualified for unemployment insurance and those working part time or low paying jobs while they look for other work. So we are approaching a 18% rate overall of unemployment.

But again, estimates were so dire, that there was no where to go but up. So, does the market just march on? It does if estimates stay so grim that they are just too easy to beat. If estimates start to move up, I think that will create a catalyst for a market correction. If the estimate for unemployment insurance filers falls to 550K, for example, I think we are setup to miss. If earnings estimates for banks go more inline with what was done in Q1, I think most miss in Q2.

This would setup the fall that many are watching out for. But if estimates remain at rock bottom lows, the market can continue to run. Makes you wonder if the analysts doing the estimates run the market or if fundamentals of companies do.