The 1 Indicator Richard Bernstein Says You Should Watch

The start of the month is always filled by monthly employment report hype. But it’s not the payrolls numbers investors should focus on, but the weekly employment claims numbers, Richard Bernstein, CEO of Richard Bernstein Capital Markets told

For the last three weeks, the level of claims has stalled after making weeks of progress.

"When the improvement stopped, the market started getting a little heavy, and I think that's the whole story,” he said. “If the employment situation doesn't continue to improve, there's no way you're going to have a bull market for much longer. That's the key."

And hour worked, while like “watching paint dry” is the number to watch in the payroll report, he added. Hours worked improved slightly last month.

The major indexes slumped on Tuesday and Bernstein said he does think the market was overdue for a selloff.

"People got a little too ahead of the game,” he said. “Growth isn't really turning that rapidly.”

It’s also important to see lower prices for oil and other commodities, Bernstein said. Oil fell 2.7 percent Tuesday to $68.05 a barrel.

"If you're a bull, you want to see lower oil prices,” he said. “Anybody who is bullish on commodities couldn't be bullish on future economic growth because commodities are inflationary and they choke off economic growth."

Rising commodities have been part of the "risk trade" where stocks and commodities move higher and the dollar weakens. For the past couple of weeks, concerns about China's growth and tighter lending standards there have trimmed some of the big gains in the shanghai stock market.

"You should be worried about the China story. That is a monster credit bubble and the government has just in the last month said they would start tightening credit. The stock market immediately sold off," he said.

"The notion that China is leading the world is, I think, is full of hype. They are building capacity but they are not consumers. If you are not a consumer, how can you lead the world. They're just building more and more capacity," he said.

Bernstein said he does favor Treasurys, along with low quality stocks, which are the first to rise when the economy turns.

"When everything goes down, Treasurys go up. It is the only asset on the other side of the see saw," he said.

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