Friday, August 07, 2009

Unemployment rate eases ever so slightly for the first time in a long time! UPDATE

The Unemployment rate for July came in this morning at 9.4% and while this is a terribly high rate, it was down 0.1% from June's number. This is the fist time in a long time where we had a lower unemployment rate than the previous month. I was a bit surprised, especially given that the Obama Administration was telling us the numbers would be worse and preparing us for bad news. I guess it's all about managing Consumer Confidence or should I say manipulating Consumer Confidence.

The pre market levels jumped after the news so I expect today to be a good one for stocks, unless we are all being manipulated there as well. This will get the S&P 500 back up over the 1,000 level and most likely also get the Nasdaq back up over 2,000 again. The Dow Futures are up about 60 in pre market so the Dow will be back up to the 9,300 level again, the top of the range we have been in now for 6 months. Will we break out above 9,400 and beyond on the Dow? I hope not. This news is just a tad better and there will be high Unemployment for a long time, some say years and that keeps the possibility of more foreclosures in housing a real possibility.

European markets were negative going into the Unemployment report but now all are positive. I would not commit new money to this market while it advances a bit. I would be using this time to take profits and selling some positions where profits have been large. The Fall is right around the corner and I am building up a cash position to be able to buy if it proves we have a major correction as I still believe we will.

UPDATE 10:00am PST

So I learned a few things about this month's Unemployment numbers. First, there are about 400,000 people who have just given up and are not in those numbers. Secondly, if they extend Unemployment Benefits as is planned when Congress returns from its recess, then those new people will add to the numbers as they are counted again. And thirdly, the people that would normally layoff workers were most likely on vacation in July. So there is no escaping it, we are in for a long duration of unemployment.

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10:17 AM  
Anonymous Jerry Wechsler said...

And undortunately, both BCON and TZA got slammed today. I need just the opposite ! I have no profits to take, nothing I can sell except at a loss. I thought I'd be way ahead on Beacon by now - thought it would around 2 or 3, and I could sell a little, but, nope. I'm glad you are in a position to collect cash, but I am not, sorry to say. Be well.

1:49 PM  

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