For the Bulls, the Market's "Just Right" This Week and Beyond

Forget about being too hot or too cold, we've got a serious "Goldilocks" market going right now.

Sure, it would be easy to say that the February jobs number from the U.S. Labor Department is arguing that the economy is too hot and all too tempting for the U.S. Federal Reserve to turn off the heat with interest rate hikes. After all, 313,000 new jobs estimated by the survey is a monster number.

And that number gets even better - the trailing two-month revision for January and December boosted the job count by 54,000.

And then there's the unemployment rate calculation that has the U.S. unemployment rate at 4.1% - a 17-year low.

Considering all of this, the bearish argument would say something like, "Well, the economy is way, way too hot, and that's really bad news; it's going to end poorly for the markets."

But let's let those bears stay in hibernation.

Because as we dig further into these the numbers, we find that there's lots to like...

The Labor Picture Is Good for the Economy, and That's Good for the Markets

First, the labor participation rate is up to 63%. This means more folks coming into the market for jobs, which is good for further production and further consumer spending.

And because of the participation boost and other factors - moderating wage growth from the prior month's 2.9% as February's wage inflation was reported to be only 2.6% and the prior month's 2.9-number was revised down to just 2.8% - we have more jobs, and more folks in the workforce, but they aren't driving prices, and hence inflation, up.

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In other words, it's "just right."

This is further evidenced by the Fed's Personal Consumption Expenditure (PCE) index for the same month, which was released just days ago. The PCE is a more accurate inflation measuring tool than CPI because it measures the entire range of expenditures for around 67% of the domestic U.S. economy, whereby the CPI is a calculated index of a (cherry-picked) selection of items.

The Fed and the Open Market Committee (FOMC) uses the PCE when analyzing inflation, and the number for the core PCE is sitting at 1.5% - which is well below the FOMC target of sub-2%.

Moreover, inflation is low not just in the U.S., but globally. That's good news.

There's No Need for Central Banks to Panic

The Organization for Economic Cooperation and Development (OECD) just released its inflation information showing that the average rate for the top 35 economies is only running at 1.8%, which is in fact down from the prior month's 1.9%.

So most of the globe's leading monetary authorities have little to no need to tighten - which is exactly the sort of discussion that was had this week by the European Central Bank (ECB), which is keeping its gas burning with its bond-buying program.

The FOMC meets next on March 20 and 21. While there might be some movement, there simply isn't any compelling need to take dramatic action.

This provides some soothing balm for our "Fed Fear" narrative... and miles of headroom for further gains in the stock market.

Add in a buoyant economy in the United States and in the European Union and other leading markets, and the market returns on the long side of things should be nice and "warm" for the foreseeable future.

The takeaway: I don't think any investor will go far wrong with long calls on the big U.S. or global indexes, whether that's ETFs like the SPDR S&P 500 ETF Trust (NYSE Arca: SPY), for instance, or market-leading stocks like Inc. (Nasdaq: AMZN). In my 10-Minute Millionaire research service, my paid-up subscribers have been enjoying the chance at a slew of double- and triple-digit long-side gains. Click here to have a look at how it works.

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About the Author

D.R. Barton, Jr., Technical Trading Specialist for Money Map Press, is a world-renowned authority on technical trading with 25 years of experience. He spent the first part of his career as a chemical engineer with DuPont. During this time, he researched and developed the trading secrets that led to his first successful research service. Thanks to the wealth he was able to create for himself and his followers, D.R. retired early to pursue his passion for investing and showing fellow investors how to build toward financial freedom.

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