A little recent history and a straight forward question for you:

This past Friday, the U.S. Labor Department reported only 32,000 jobs were created in July, sharply lower than economists and analysts had been expecting.

Oh, how they were wrong! We are talking about "la cream de la cream" of financial institutions making really bad forecasts. Bank of Tokyo had estimated 200,000 new U.S. jobs, Barclay's Capital; 280,000 new jobs, CIBC World Markets; 233 new jobs, Citigroup; 300,000 new jobs, Goldman Sacks; 300,000 new jobs, Merrill Lynch; 250,000 new jobs and even the most respected J.P. Morgan had estimated 200,000 new U.S. jobs created in July.

It was like a bad joke. At 8:11am EST, I printed out a story from Bloomberg News titled "U.S. Payrolls Probably Rose by 240,000 in July, Survey Finds." Just after 8:30am EST, Bloomberg News ran a new story, this time, "U.S. July Payrolls Rise 32,000."

Here's my question: After having read my daily PROFIT CONFIDENTIAL commentaries for the time period you have been receiving them, were you really surprised by the low employment figures? I hope not.

To those readers who have written to tell me I've been too bearish, I'm not going to tell you "I told you so," but I will tell you I don't enjoy being a pessimist! In fact, my personal character is that of an optimist.

But when it comes to the economy and the stock market, I call it as I read it. My goal in these commentaries is to deliver my honest interpretation of what's happening in the economy, real estate, the stock market, gold, interest rates... so you can add whatever prudence I can offer to your personal financial investment and management.

Back to the news at hand: Repeatedly, I've been suggesting investors exit big cap stocks. On July 20, 2004, I sent a PROFIT CONFIDENTIAL commentary out to my readers entitled "Investors Beware." To quote that day's commentary: "Given what my technical indicators are telling me, the stock market could be on the verge of a major breakdown."

Investors and analysts were quick to blame last week's stock sell-off on the "bad news jobs report." But the reality is that the market started breaking down much earlier. I wonder what "event" investors and analysts will blame for the next down leg of this market?

The stock market is a leading indicator of events to happen three, six, twelve even twenty-four months away. And right now, the market doesn't like what it sees ahead.

Just look at stock earnings. Many of the S&P 500 companies reporting second quarter profits announced slower earnings growth for the next one to three quarters. In fact, analysts had to revise and lower their earnings forecast on a third of the S&P 500 companies. Not a good sign of future earnings growth.

Dear reader, the reality is finally setting in. I don't see this as a buying opportunity... unfortunately I see more weakness ahead. It could get very choppy.