Market comments for Sept. 1st. 2011 (UPDATE)

IInitial Jobless claims data released this morning showed that for the the period of 8/27 the number was 409K new claims, The previous week's number was revised from 417K to 421K. Expectations for the week of 8/27 were for 405K, so that the 409K was more than expected. These numbers have stubbornly held over 400K now for quite a long time and it shows how difficult it is to go and stay below 400K. Unless we do, the unemployed will remain unemployed, causing continued hardship for these families and our economy.

Also reported this morning was Q2 Productivity. It was revised downward from a previous reading of -0.3% to -0.7% and Unit Labor costs for Q2 was revised from 2.2% to 3.2%. Putting this data together with the Productivity data, U.S. Corporations might have run out of easy ways to make money as the costs of labor has gone up at the same time their workers productivity has gone down. This may require corporations to hire more people, which is good for the unemployed, but bad for future earnings and profitability. This should be a negative for the U.S. stock market, but we shall see. The market has not been following what I think should happen and has ignored economic data the past 6 months.

Later this morning the all important ISM Index will be reported. Expectations are for the data to come in at 48.5. Any number lower than 50.0 shows negative growth if it does. I will UPDATE this blog post when the data is released, so come back after 10:00am EST.

August Unemployment data will be released tomorrow.

The stock market chart for the Dow and S&P and other indexes has shown a rise above those resistance lines I drew on previous posted charts. Is this a true breakout or a Bear trap seems to be the question on many minds these past few trading days. I think it is another Bear trap but we won't know until after it takes palce and is evident. Sorry, I am not a crystal ball reader.

UPDATE: 7:05am PST

The ISM Manufacturing data came in at 50.6%, not below 50 which would have signified we are in a recession, but we managed to survive. Now the ISM number is lower than the previous month which came in at 50.9%. So clearly while above the magic number of 50, it is going in the wrong direction and whether we go lower next month or the following month, it is not a good number to show demand in the economy.

Market comments for Aug. 9th, 2011

The Futures this morning look like we will start with a positive gain of about 130 points on the Dow. Europe is up slightly this morning as well, all less than 0.5% gains. So if you are feeling good this morning that the worse may be over, don't count your chickens just yet. I believe we will have a rally from here and go back over the 11,000 level in the next day or two and maybe test 11,500 eventually again, but soon there after, we will continue the downward trend again going below the lows of yesterday's close at 10,809. This is a good interim time to make adjustments to your portfolio and prepare yourself for more pain to come.

The thinking behind this is Elliott Wave Theory. We have concluded Wave 1 down of a 5 Wave pattern. Wave 2 should be a bounce up and it is impossible to predict its stopping point but I have given you an idea above. Wave 3 will be a down Wave and it will far exceed the lows of Wave 1 and possibly take us down as low as the 9,000 level. I hope I am wrong in my prediction here, for those who get extremely stressed when the market drops like it has.

Productivity data was released this morning and it came in at -0.3% for Q2. The prior quarter was revised down from +1.8% to -0.6%.

Market comments for June 2nd UPDATED

The market on Wednesday finally dropped given the recent poor economic news. I have said that I thought there would be lower highs and lower lows going forward and today we seemed to affirm that prediction with a drop of 288 points on the Dow. Below, I have added a 3 month chart of the Dow, which shows new lower lows, signified by Blue arrows and new lower lows, signified in Red arrows.


Thursday will show the release of Initial Jobless Claims, Productivity, Factory Orders and Unit Labor Costs. On Friday the Unemployment rate for May will be released as well.

UPDATED June 2nd at 5:38am PST

Initial Jobless Claims for the week of May 28th came in higher than expected again for the 4th straight week at 422K, while expectations were for only 400K. It seems that it is going to take a long time before we get back below 400K as were were over a month ago. I would expect this data will show that the Unemployment rate ticks up for May to possibly 9.1%. If it does this, that would be the second month in a row where the rate has increased again.

Market comments for Aug. 11th: Reality is about to catch up!

The Futures market shows the Dow down 126 in pre-market and the European markets down 1.5% or more. The reality of the recent economic data appears to be catching up to the reality of the hefty prices in the stock market and company valuations. The warning bell has been rung many times over th past 3 months and the rings are getting louder. Oil has broken below $80/barrel for the first time in a while. Then Yen is now down to under 85 to the dollar. Top line Revenue growth has not been the fuel of this past quarters earnings achievement. It has been cost cutting. But that too may be near its end as well as Unit Labor Costs are starting to rise, reported yesterday at +0.2%, and Productivity is starting to wane, reported yesterday at -0.9%. The Trade Balance for June has come in at -$49.9 Billion while it was expected to come in at -$43.0 Billion. The prior month it came in at $42.3 Billion. So this is definitely not going in a good direction. Gold is up over $10/ounce this morning. Exports were down -1.3% and Imports were up 3.0%.

We also expect Initial Jobless Claims to rise again this week. The number expected tomorrow is 465,000 compared to the previous week's expectation of 460,000 but actually came in at 479,000. And on Friday CPI and Core CPI numbers are reported, as well as Retail Sales and the Michigan Sentiment index. So much more news to come this week.

S&P Futures down -16 in premarket and the Nasdaq Futures are down -30. It looks like we may be finally merging reality with the value of the stock market. We are going lower.

Market comments for Aug. 10th (Update)

Economic data released this morning showed Q2 Productivity was the lowest since Q4 of 2008. It came in at -0.9%. Expectations were for +0.1%. Unit Labor Costs rose slightly +0.2%. Expectations were for them to rise 1.3%. Later this morning, data for Wholesale prices will be released. Expectations are Wholesale prices will be at 0.0% gain. I expect it to go negative, showing deflation but 0% is still amazing when you think about it.

Then the big item today is the FOMC will be releasing its rate decision and comments at 2:00pm EST or 11:00am PST., which is being anticipated with some anxiety. People want to know how the Fed will react to deflation and whether there will be more easing of Interest rates. Will the Printing Presses roar printing new money faster than it can be used. The worry had been Inflation but there appears that is not what the Fed is now concerned about. It's Deflation, just like in the 1930's.

Futures are down 105 points on the Dow.

UPDATE: 9:15AM PST

Above is the chart from Haver Analytics of Unit Labor Costs. Trend is pretty bad indeed. Looks like another piece of data showing deflationary times ahead to me