Though the market may have gotten off  to a bad start with Monday's 0.7% stumble, the bulls took charge again the very next day to hammer out a gain for the week.  Granted, it was less than a 0.4% gain when all was said and done, but a gain is a gain.

On the other hand, it didn't take long after last week's turnaround from Monday's dip for the lethargy to set in again (some of which is likely due to the winter holiday season).  Once again, the S&P 500 (SPX) (SPY) is bumping around new-high territory, but failing to clearly move above this area.

We'll dissect the action and weigh the odds, but let's first set the bigger-picture stage with a look at last week's major economic news.

Economic Data

There was plenty of economic data in the lineup last week, but all eyes were on Friday's unemployment data.  The jobs numbers were better than expected, but when you delve in they are perhaps not as good as the headlines implied.

Yes, the Bureau of Labor Statistics reported that in November the U.S. economy added (net) 321,000 jobs, more than jiving with the ADP payroll report of 208,000 new jobs being created in November. So why didn't the unemployment rate change from 5.8%?  It's got to do with the way unemployment is calculated.  The number of people who count themselves as unemployed – but willing and able to work – grew just about as much as the entire labor pool (employed or not) did, resulting in no net change of the proportion of unemployed-to-total-labor-force.  It's a dubious improvement… more people are working, but more people that would like to have a job are also not working. 

Employment Trends Chart

Source: Thomson Reuters Eikon

The proverbial litmus test continues to be the labor force participation rate and the employment rate of the nation's population.  The percent of the nation's inhabitants at work now is 59.2%, up from a low of 58.3% on late-2009, but still well under the peak at 63.3% seen in 2007.  The percent of the population that's officially in the labor force (working or not) is still at 62.8%, just a tad above the multi-year record low of 62.7% hit in September. Some, though not all, of that decline can be blamed on the ongoing wave of retirement of the baby-boomers.