Thursday, February 12, 2009

Morning Update/ Market Thread 2/12

Good Morning,

We now have a technical breakdown in the futures. There appears to be some sort of dislocation in the currency markets that’s sending the dollar up sharply and stocks down sharply. We just broke beneath that SPX wedge and are right at the 820 area. Further selling will be trouble for the market, we’re getting close to confirming a break of the pennants.

This morning retail sales came in higher for the first time in seven months (data from Econoday):
Retail sales actually surprised on the upside in January with a rebound and suggesting that the consumer is not yet down for the count. Overall retail sales rebounded 1.0 percent in January, after a 3.0 percent drop in December. The markets had expected a 0.8 percent decrease. Excluding motor vehicles, retail sales made a 0.9 percent comeback, after falling 3.2 percent in December. The January ex-auto jump was above the market expectation for a 0.5 percent decrease. Even though gasoline sales did boost spending, this was not the sole factor in overall strength. Excluding motor vehicles and gasoline, retail sales posted a 0.8 percent gain after a dropping 1.8 percent the month before.

While jobless claims were reportedly down for the week, continuing claims are at an all time record:
Contraction remains steady and severe in the labor market. Initial jobless claims came in at 623,000 in the Feb. 7 week vs. an upward revised 631,000 in the Jan. 31 week (626,000 first reported). The four-week average jumped over the 600,000 level, up 24,000 to 607,500. These are the worst levels since the early 80s.

Continuing claims are at their worst levels yet. Continuing claims for the Jan. 31 week rose 11,000 to a record 4.810 million. The unemployment rate of insured workers is unchanged at 3.6 percent.

Today's report is a reminder to the markets that the jobs market, the very foundation of the economy, continues to contract.

Foreclosure where down for the month of January as well.

The New York Fed is in talk to add four new firms to their list of primary dealers so that they can move the massive quantities of bonds that they are floating. If that’s not a sign of the times, I don’t know what is. I’ll post a story on this later.

So, I’ll do some investigating to the FX dislocations, the selling may be fear over the banks, but if that’s the trigger, why did it just kick in now? Let’s see. Anyway, new lows are here, on the DOW, the next support is all the way down at the pin lows. Watch for a retest of this break…

Have a good day, and we’ll see you in the comments thread,

Nate